Why You Need a Financial Plan

Studies have shown that financial planning plays a key role in achieving major life goals. Why wait any longer? Start assessing your current situation,
setting goals and planning for your own financial future today.

The Best Laid Plans

Before you can start planning, you need a clear picture of where you stand today. Tracking
your income and expenses on a regular basis and assessing your net worth — total assets minus
total debts — helps you see how much money you can commit to individual financial goals.

Your First Home

Home ownership is at the heart of the American dream. The biggest obstacle facing home buyers is
funding a down payment — typically 10 percent to 20 percent of a home’s purchase price. The good
news is there are many down-payment options for first-time buyers. Check with banks or mortgage
companies in your area to see what special programs may be available to you.

If you intend to buy a house within five years, a good way to save for a down payment may be through
short-term investments, such as bond or money market funds. In addition, you can now
use money from an IRA to help pay for your first home. Up to $10,000 can be withdrawn penalty
free, although you’ll have to pay taxes on amounts withdrawn from a traditional IRA.

Your Child’s Education

Ideally, you should start saving for your child’s education as soon as — or even before — he or
she is born. Tuition and fees at four-year colleges continue to rise between 4 percent and 6 percent
annually — more than twice the current rate of inflation.* Depending on your child’s age, you may
want to consider investing your education dollars in stocks or stock mutual funds. While stocks can
be riskier than other investments over short time periods, over the long-term they have historically
produced the highest returns. There are many other education savings options, and some, such as
state-sponsored 529 college savings plans and the Coverdell Education Savings Account, offer tax
advantages as well.

Your Retirement

Planning for a secure retirement is probably your most important long-term financial goal. Experts
estimate that, in many cases, you will need at least 70 percent to 80 percent of your final working
year’s salary for each year you spend in retirement. That’s why it’s important to start saving for
retirement early in life and keep saving as much as you can throughout your working years. By making
regular contributions to your retirement account at work, and by choosing the investment options
best suited for your years until retirement, you are taking advantage of one of the easiest — and most
effective — ways to save for this important goal.

Get the Help You Need

Knowing the right financial moves to make and when to make them is a complicated job that
most of us don’t have the resources to handle alone. Consider consulting a qualified financial
professional who can help you keep your financial plan on track with your ever-changing needs.

Submitted by Scott Stanley, a Woodmen of the World agent based in Corsicana.