InSight

Welcoming You to Financial Planning: A Simple Guide

Financial Planning Dentist

Embarking on your financial planning journey might feel like a giant leap, but remember: every expert was once a beginner. Let’s take this step together, ensuring your financial stability and prosperity with some essential tips:

1. The Safety Net of an Emergency Fund:
Begin by establishing an emergency fund, aiming to accumulate at least three months’ worth of living expenses. This fund provides a safety net for unexpected situations, protecting your financial stability.

2. Maximizing Employer Benefits:
Your employer might offer various benefits like 401k matching, Employee Stock Purchase Plans (ESPP), and Health Savings Account (HSA) contributions. During open enrollment periods, please don’t hesitate to reach out to us if you need assistance in understanding or selecting your benefits.

3. Balanced Saving for Your Future Home:
Begin by allocating savings to both your employer 401k and an investment account, ideally striving for 20% of your gross income. If home ownership is on your horizon, consider adjusting your strategy 1-2 years ahead of the purchase by directing savings to a more liquid account.

4. Renting or Buying Within Your Means:
A thumb rule is to ensure your rent or mortgage doesn’t exceed 30-35% of your income. And, don’t forget to account for potential maintenance costs, ensuring your emergency fund remains robust and separate.

5. Crafting a Viable Budget:
Encourage a simple budgeting approach: Income minus Savings equals Your Spending Budget. Aiming to save around 20% of your income can be a stable starting point.

6. Navigating Through Debt:
Steer clear of problematic debt, such as high-interest credit card balances, while recognizing that some debt, like education and mortgages (accretive debt), can potentially work in your favor. Let’s work together to devise a strategy that balances debt management and future savings.

7. Smart Vehicle Purchases:
When it comes to purchasing vehicles, consider Certified Pre-Owned options, particularly those known for low maintenance and high resale values, like Toyotas and Hondas.

8. Evaluating Debt Strategies:
Always prioritize accretive debt (like mortgages and student loans) over erosive debt (like car loans and credit card debt) but be sure to consider the interest rates and potential returns from other investment opportunities when planning payoffs.

9. Bank Offers? Let’s Chat First:
Banks are in the business of profit-making. If you’re considering a bank’s offer, let’s discuss it together first to ensure it’s in your best interest.

10. Optimizing 401k Contributions:
If you’re earning at or below a specific income bracket, consider contributing to a Roth 401k for potential future tax benefits. Navigating between Roth and Traditional 401k contributions can be nuanced, so let’s explore the best approach for your unique situation together.

A Note for Young Adults on Investing:
Investing can be a powerful tool for wealth accumulation. Consider exploring Total Stock Market ETFs (Exchange Traded Funds), which track the entire stock market, offering a low-cost and diversified investment option.

Your financial journey is personal and unique. We’re here to guide you through it, ensuring you’re equipped with the knowledge and strategies to navigate through each stage confidently. Let’s build your financial future together!

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