October is Financial Planning Month, and this month we are reminded how important having a financial plan is — and how much value working with financial planning technology and a financial adviser can provide in helping you to achieve what is most important to you. According to a Hearts & Wallets survey from last year, 82% of consumers think about their financial goals, but only 54% of them actually have some sort of plan. And of those who do plan, only 37% have made plans in writing.
Written financial plans are important, and consumers can utilize innovative technology to maximize every dollar they earn along the journey toward reaching their goals.
For many individuals, competing priorities — like paying down debt, establishing an emergency fund and saving in their employer’s 401(k) — can feel daunting, or even impossible. Making the right decision about where to allocate each available dollar most effectively can be complex. Leveraging technology and working with a financial professional can help make that process easier.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Once a plan is put in place, technology platforms can offer access to dashboards that provide a view of an individual’s entire financial picture and allow them to see and track progress toward not only saving for retirement or dream purchases, but also toward other financial goals, like paying down debt, saving for health care expenses and more.
When thinking about how to maximize the impact of each dollar, there are several things that should be considered and appropriately prioritized. Using the financial planning technology available in today’s marketplace, Americans can determine where to put their next dollar:
- Emergency fund. Establishing an emergency fund is something that every individual should put on their agenda. Consumers can utilize financial planning technology to create emergency funds for meeting one, three or six months of emergency expenses. Smart technology can help to aggregate and harness personal and industry data to help consumers identify how much of their income to set aside to cover emergency expenses or meet expenses when they could be out of work.
- Credit cards. Evaluating credit card debt and making decisions regarding which debt to pay down first is another area that should be evaluated. Consumers can create a personalized, and optimized, schedule to help them reduce and pay off credit card debt while reducing the overall interest being paid.
- Health savings accounts. Certain financial planning solutions enable consumers to understand how much they would need to set aside in health savings accounts (HSAs) to meet their estimated annual expenses. They can also help consumers understand the potential tax-deferred growth of their contributions over time.
- Retirement savings. Consumers can use financial planning tools to calculate how much savings they would need in order to meet the goals they have set for retirement. They can also view the potential impact that taking advantage of employer contributions or increasing personal contributions to a 401(k) could have on their savings over the long term for helping them to achieve a financially secure retirement.
- Student loans. Some financial planning technology applications can enable consumers to evaluate multiple student loans with different interest rates to find the best way to pay off their college debt and track progress toward doing so.
- Upcoming goals. Financial planning technology can create customized monthly savings strategies for helping consumers meet goals in the upcoming year or within the next decade. These include everything from saving for a vacation to the Caribbean or Europe, to buying a home or paying for a child’s college tuition. By working with modern financial planning technology and/or advisers who rely on it, consumers can see how they can best allocate their paychecks, and other income, to obtain the savings to meet these goals and see the impact of potential budgeting changes.
Harnessing the right technology can not only help individuals address each of these financial questions, but also help to evaluate decisions across competing priorities and maximize the impact of each dollar. Even a slight change in how income is allocated can have a big impact on how quickly debt is paid down or wealth grows.
A financial plan is so much more than just setting financial goals — it also involves making the most of the money Americans have to meet those goals.
Making use of holistic financial planning tools can make the journey toward financial goals much more productive in the short and long terms. During Financial Planning Month this year, consumers should stop to think about how to maximize the impact of every dollar.
related content
- Finding a Balance in Financial Planning: The Tale of Two Fathers
- For Financial Planning Success Now, Start by Looking at the Past
- In Financial Planning, Consider Your ‘Fuel Tank of Capability’
- Financial Planning by Life Stage Focuses on You, Not Your Age
- This Is How Logan Roy of 'Succession' Should Have Approached Estate Planning
-
Time to Spring-Clean Your Finances: A Financial Professional's Four Steps to Tidy Them UpA midyear review of everything from spending to saving, with adjustments as needed, can set you on track to financial security. Plus, don't forget to check in on your workplace benefits.
-
Why a Law Firm Secretly Recording Client Conversations Is Wrong (and Illegal)A law firm that has been recording client conversations without the clients' knowledge or permission and has threatened employees if they speak out faces legal and ethical challenges.
-
Donating Complex Assets Doesn't Have to Be ComplicatedIf you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last LongAccording to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond InvestorsHigh-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
