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Education

What smart financial find ways to trim your expenses (cancel unnecessary
subscriptions, insulate your house, start meal plan-
planning looks like now ning, etc.).
4. Tackle high-interest debt: A big portion of what you
save each month should go toward paying off high-in-
terest debt. Private student loans, personal loans and
credit cards tend to have the highest rates that often
divert funds from your milestones.
5. Build an emergency fund: Another portion of your
savings should go toward a reserve fund to cover from
three to six months' worth of living expenses. Such a
financial pillow will help you feel more confident and
prevent stress if times get rough.
6. Plan for retirement: If you have a 401(k), gradually
expand your contributions toward the basic IRS limit
By Chad Otar ($23,000 in 2024). An IRA is a tax-advantaged invest-
Lending Valley ment account with a $7,000 contribution limit in 2024.
You can contribute to both a 401(k) and an IRA to build
herever you are in your payments career, retirement savings.
financial planning will help you meet your
life goals. However, to do that, you need an 7. Plan your taxes: Learn about taxes to take control
W effective strategy. This article offers you a of your future. Here are just a few things you can do:
step-by-step- guide to smart financial planning: contribute to a retirement account up to the full dollar
amount permissible, which will reduce the amount of
1. Conduct a financial health checkup: You need a income subject to tax; take advantage of tax-free gifts;
baseline, so determining your net worth is your first and remember about government incentives offered.
step.Make a list of your assets (real estate, valuable
items, bank accounts) and debts (loans, credit cards, 8. Get insured: Shop around to find the best life, health,
etc.). Subtract your debts from your assets to find out homeowner and car insurance. All these financial safe-
your net worth. Don’t get upset if you end up in the ty nets will help you recover if something harmful hap-
negatives. That's normal for those who are just start- pens.
ing their financial journey. Repeat this checkup at least 9. Map things out for your loved ones: Have a will,
once a year to keep an eye on your dynamics. and keep the beneficiaries of your retirement accounts
2. Set financial goals: A plan requires that you know and insurance policies up-to-date. Without these mea-
what you want to spend your money on. To boost your sures, you cannot be sure that your assets will be dis-
motivation, make a list of your short-term, medium- tributed according to your wishes.
term, and long-term goals. Short-term goals can be
achieved from a few months to five years. Examples Smart financial planning doesn’t have to be complicated
include buying a new car, paying off certain types of and it enables you to accomplish your life goals without
debt, taking a vacation or renovating your home. making big sacrifices. Make a plan, stick to it, track your
progress, and make necessary adjustments as you go.
Medium-term goals can be achieved from five to 10
years. Examples include starting your own business, Note: I referred to the following in researching this article:
saving for a down payment on a house. Long-term • www.experian.com/blogs/ask-experian/how-to-set-smart-
goals can be reached in 10 or more years. These include financial-goals/
saving for retirement, saving for a child's college educa-
tion, or becoming debt free. • www.irs.gov/retirement-plans/401k-plans
• www.irs.gov/retirement-plans/individual-retirement-ar-
Determine an exact sum and a target date for each goal. rangements-iras
The more specific your goals are, the easier it will be to
track your progress. • www.irs.gov/businesses/small-businesses-self-employed/
frequently-asked-questions-on-gift-taxes
3. Master the art of budgeting: Track all of your ex- •
penses for at least a month. This will help you find
out where your money is going and where you can cut Chad Otar is CEO of Lending Valley Inc. For information about the
back. Then, aim to set aside at least 20 percent of what company, please visit www.lendingvalley.com. To reach Chad, send an
you earn each month. If that’s unattainable right now, email to chad@lendingvalley.com.

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