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Financial planning is for everyone (yes, that means you)

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Many people may think that only wealthy investors with complex needs need financial planning, but the reality is that financial planning can help everyone – not just the wealthy. Your workplace may help you get started.

The truth is that if you have any source of income, you are always deciding what you are going to do with it: – what you will spend it on (groceries, rent or mortgage, clothes) and how much you will spend to save. Financial planning simply means having a well-thought-out strategy that can help you achieve your long-term goals while meeting your immediate needs. Many employers offer benefits that can help individuals connect with a financial coach, advisor or tool to develop a personalized financial plan.

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Recent events have highlighted the importance of staying on track financially and preparing for the unexpected, and the stress that can result if we don’t. Lending Tree’s Pandemic Money Survey (opens in a new tab) found that 42 percent of Americans said they cried about their finances during the COVID-19 outbreak, but only 18 percent had a plan in place to address the problem.
Just as it’s impossible to build a skyscraper without a blueprint, we all need a detailed plan to build a financial framework that not only meets our daily needs, but also lays the foundation for the future we envision. Developing a realistic financial plan is your first step.
If you can imagine it, you can do it
Morgan Stanley’s research found that most investors are concerned with ensuring they can meet their financial needs over their lifetime, maintain or improve their standard of living, and be able to pay for unexpected medical expenses. But each person also has unique priorities. What is most important to you: taking care of your loved ones, buying a home, preparing for retirement? Maybe it’s all of the above, or even more. Whatever your current financial situation, financial planning can help you see new possibilities and take control of your future by implementing new tools and behaviors.

That’s why many companies now offer financial planning support to their employees. This may take the form of financial coaching, strategy development or advice to help you identify and make progress toward your financial goals. Find out if your employer offers access to financial planning apps or websites, education on investment basics, emergency savings matching contributions or student debt repayment plans. In short, these workplace benefits can help open the door to a more secure financial future.

Laying the groundwork
Brookings Institution research (opens in a new tab) shows that only one-third of Americans are truly financially healthy. Half are just coping, and nearly one in five is financially vulnerable – meaning they are struggling in nearly all areas of their financial lives.

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To start taking control of your financial future, map out your complete financial picture, including all your debts (don’t forget interest rates) and sources of income. Two simple tests: calculate whether you have six months of emergency savings on hand and use a basic retirement calculator to see if you can meet your future needs. This snapshot can help highlight some of your baseline financial strengths and weaknesses.

No matter where you find yourself, one way to get yourself on your feet is to set goals and then work toward them step by step. The key is to make your goals specific, measurable, action-oriented, realistic and time-bound (SMART).

Be 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,” set a specific amount, such as $100 more per week.
Measurable: Goals must be trackable. A goal of saving an additional $100 per week is a goal you can monitor over time.
Action oriented: Define what you will do to reach your goal. For example, to save an extra $100 per week, you might cut your budget to find an extra $100 per week or a part-time side job.
Realistic: Is your goal attainable? If saving an extra $100 a week is too high, maybe you have to adjust your goal to $50.
Have a time limit: Every financial goal should have a deadline so you know where you stand. When the time is up, you can reassess and set new goals.
With this type of process, you can begin to develop a practical financial plan that reflects your goals and priorities. If your workplace benefits can help you get started, then you’ll be one step ahead.

Charting your future
Developing a financial plan is a basic but necessary step in securing your financial future, and the support you can get through your workplace can be the difference between always striving and achieving your goals.

No matter what your financial dreams are, your path to success will require patience, diligence and careful planning. Don’t expect to reach your final destination overnight, but the sooner you become familiar with the workplace resources available to you and use them to develop a thoughtful financial plan, the smoother your journey is likely to be – no matter what life throws at you.

This article is for informational purposes only. The information and data in this article was obtained from sources other than Morgan Stanley. Morgan Stanley makes no representations or warranties as to the accuracy or completeness of information or data from sources other than Morgan Stanley. The strategies and/or investments discussed herein may not be suitable for all investors. Morgan Stanley recommends that investors evaluate specific investments and strategies independently and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on the investor’s individual circumstances and objectives.

By providing links to third party websites or online publications/articles, Morgan Stanley Smith Barney does not imply affiliation, sponsorship, endorsement, approval, investigation or verification with third parties.

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