Sept. 20--BLOOMINGTON -- A financial plan can help people reach short-term goals like purchasing a vehicle, or long-term dreams like funding children's college educations or saving for retirement.
Yet according to a recent Country Financial survey, only about 28 percent of Americans have a financial planner.
About half of those who forego a financial coach think investing is too complicated or it's difficult for people to determine who to trust, according to a July report by the Consumer Federation of America, an association of non-profit consumer organizations.
"With a financial plan, the sooner you get something in place, the better direction you will take in your life," said Carol Burroughs, a certified financial planner with Forward Financial Planning in Normal. "Having a plan keeps you on track."
The first step in planning is to determine monthly expenses, says David Stokes, financial planner for Edward Jones in downtown Bloomington.
"I've had a lot of people start using mint.com. It's an app on iPhone that can track where your money goes," said Stokes. "That really helps people."
Next, individuals or families should set up short-term and long-term goals and a plan for achieving it, including a monthly budget, said Stokes. Short term goals might include paying off a car, while long term goals could include setting up a retirement account.
Developing a plan to reach those goals could involve cutting back on extras like dining out, or cutting costs on a new vehicle, to be able to save more money, he said.
"You might have to give up something today to get something tomorrow," said Stokes.
Also important is an emergency fund to provide for necessities in the event of job loss, illness or other unexpected event, said Burroughs. And in a slow recovering-economy people should cover from six to nine months' worth of living expenses, such as rent or mortgage and car payments.
But "if you have pretty good health and disability coverage at work, you can sometimes get by on a smaller emergency fund," said Ruth Ann Potts, manager of advanced panning in the financial and brokerage division at Country Financial.
Potts said the aging population of Baby Boomers has increased interest in saving for retirement.
"But it doesn't automatically translate to increased savings," said Potts. "In the current economic environment, paying off debt is often a higher priority than saving for the future."
In recent months, Burroughs has also helped more people in their 30s to establish a financial plan, she said. Those who come in at a younger age have time to plan ahead, giving them more time to save and reach their goals.
A Country Financial survey in August found that more men, 55 percent, were able to save money than women, 48 percent.
Stokes said women face challenges in saving when they choose to stay home to raise children.
"If they are out of the workforce, pensions and Social Security will be lower," said Stokes. "If a spouse is contributing to their company-sponsored 401k, at the same time they should be contributing into a Roth IRA."
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