personal finance

Financial Planning Is for Everyone (Yes, That Means You)

You don’t have to be wealthy or anywhere near retirement to benefit from a financial plan. In fact, everyone would be better off if they took a moment to think through the basic elements of building a financial plan. And don’t worry: It’s not as complicated as it sounds!

Many may think financial planning is only needed for wealthy investors with complex needs, but the reality is a financial plan is something that can help everyone — not just the wealthy. And your workplace may be able to help you get started.

The fact is, if you have any source of income, you’re always deciding what you’re going to do with it: — what you’ll spend it on (groceries, rent or mortgage, clothes), how much you’ll save. Financial planning simply means having a well-thought-out strategy that helps you achieve longer-term goals while meeting near-term needs. Many employers offer benefits that can help individuals connect with financial coaches, advisers or tools to create a personalized financial plan.

Recent events have highlighted the importance of staying on track financially and preparing for the unexpected, and the stress that can result when we don’t. Lending Tree’s Pandemic Money Survey found that 42% of Americans said they cried over their financial situation during the COVID-19 outbreak, but only 18% made a plan to tackle the problem.

Just as it’s impossible to build a skyscraper without a blueprint, we all need a detailed plan to construct a financial framework that takes care of not just our day-to-day needs, but also to lay the groundwork for the future we envision. Creating a practical and actionable financial plan is your first step.

If you can imagine it, you can do it

Morgan Stanley research has found that most investors are concerned with ensuring they can cover their financial needs during their entire lifetime, maintaining or improving their standard of living, and being able to cover unexpected medical costs. But everyone also has unique priorities. What matters most to you: caring for your loved ones, buying a home, preparing for retirement? Maybe it’s all of the above, and more. Regardless of your current financial circumstances, a financial plan can help you see new possibilities and take charge of your future by implementing new tools and behaviors.

This is why many companies now offer financial-planning support to their employees. This may take the form of financial coaching, strategizing or advice to help you identify and move toward your financial goals. Find out if your employer offers access to a financial-planning app or website, education on investment basics, matching contributions on emergency savings, or student debt repayment programs. Together, these workplace benefits can help open the door to a more solid financial future.

Laying the groundwork

Research from the Brookings Institution shows that just one-third of Americans are truly financially healthy. Half are just coping, while nearly one in five are financially vulnerable — meaning, they’re struggling with nearly all areas of their financial lives.

To start taking control of your financial future, map out your full financial picture, which includes all your debt (don’t forget the interest rates) and income sources. Two simple tests: Do the math to find out if you have six months of emergency savings readily at hand, and use a basic retirement calculator to see whether you’re on track to cover your future needs. This snapshot can help highlight some of your baseline financial strengths and weaknesses.

Wherever you find yourself, one way to put yourself on more solid ground is to create a goal and then work toward it one step at a time. The key is to make your goals Specific, Measurable, Action-oriented, Realistic and Time-bound (SMART):

  • Specific: You can’t achieve a goal unless you know exactly what it is. For example, instead of saying you want to “save more money,” target a specific amount, like $100 more per week.
  • Measurable: The goal needs to be something you can track. A goal of saving an extra $100 each week is something you can monitor over time.
  • Action-oriented: Define what you’ll do to reach your goal. For example, to save $100 more per week, you might cut back your budget to find an extra $100 each week or freelance on the side.
  • Realistic: Is your goal achievable? If saving $100 more per week turns out to be too high, maybe you’d have to adjust the target to $50.
  • Time-bound: Every financial goal should have an expiration date, so you know where you are in terms of your progress. When time’s up, you have a clean slate for reassessing and setting a new goal.

With this type of process, you can begin to build a practical financial plan that reflects your goals and priorities. And if your workplace benefits can help you get started, you’ll be one step ahead of the game.

Mapping your future

Creating a financial plan is a basic but necessary step toward securing your financial future, and the support you can access through your workplace may be the difference between always struggling and achieving your goals.

Whatever your financial dreams, your road to success will require patience, diligence and careful planning. Don’t expect to reach your ultimate destination overnight, but the sooner you familiarize yourself with the workplace resources at your disposal and leverage them to create a thoughtful financial plan, the smoother your journey will likely be — no matter what life throws your way.

This article has been prepared for informational purposes only. The information and data in the article have been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. The strategies and/or investments discussed in this article may not be appropriate for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
By providing links to third-party websites or online publication(s)/article(s), Morgan Stanley Smith Barney is not implying an affiliation, sponsorship, endorsement, approval, investigation or verification with the third parties.
Tax laws are complex and subject to change. Morgan Stanley Smith Barney, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol. Individuals are encouraged to consult their tax and legal advisers (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account. © 2021 Morgan Stanley Smith Barney LLC.   Member SIPC.  CRC#3765213    09/2021

About the Author

Krystal Barker Buissereth, CFA®

Head of Financial Wellness, Morgan Stanley

Krystal Barker Buissereth, CFA®, is a Managing Director and the Head of Financial Wellness for Morgan Stanley at Work. In this role, she is responsible for working with corporate clients and organizations on creating, implementing and managing financial wellness programs that meet the needs of their employees.

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