FREE ESSAY ON FINANCIAL PLANNING

FINANCIAL PLANNING

SAVINGS:
Shop around for a bank that offers you free checking and waives ATM fees if you maintain
a low minimum monthly balance in your checking account or in a combination of accounts.
This can save you hundreds of dollars a year.
You also need to sign up with a credit union to minimize your banking costs. To find out
if you're eligible to join one, call 800-358-5710 and ask for the number of your states
Credit Union League.
Don't put your money in a money market account just because, it pays a slightly higher
interest rate than a plain old savings account. To avoid monthly maintenance fees, you
often have to keep more money in a money market account than you would in a savings
account.
If you've been charged an outrageous fee for a bank service, complain. Being forceful but
polite will often help you persuade the banks customer service rep to waive the charge.
You also need to resist buying mutual funds on which banks charge commissions. Look into
some of the low-cost mutual fund companies. 
INFLATION:
Inflation can drastically reduce the purchasing power of the dollar over time.
If the company you work for has a retirement savings plan or open an individual
retirement account (IRA) at a no-load mutual fund I would say join right now.
If the company you work for offers you a 401K put as much money in the 401K as your
employer will match. A 50-cent match for every dollar you put in is the same as earning a
fifty percent return on investment. 
Before you up and quit your job or you find a job that better suits you, check and see if
you have worked long enough to take all your 401K money with you when you decide to
leave. If that is not the case, consider staying for a few more months, because that
could be the difference between thousands of extra dollars in your pocket. 
If your work for yourself, check out SEP-IRA's and Keoughs. These plans may permit you to
stock away much more money for your retirement that what you could with an IRA alone. 
INSURANCE:
You need enough life insurance to provide for your dependents (spouse and children) so
that they can carry on a decent life style if you were to pass on. If you have infants,
which means that you need to figure out how much they will need to live for at least the
15 to 20 years. When a company offers a flexible benefit plan, you should think
carefully. If you are single and without any dependents, you would want better health
insurance or more disability coverage. What ever you do, don't go without health
insurance, no matter how healthy you may think you are. The easy way to find affordable
coverage is to see if there is a group you can join, such as a trade association, or a
religious organization, that offers group insurance. If you are between jobs, purchase
low cost temporary coverage. 
When buying car insurance, check several companies that sell directly to consumers. Also
remember who is driving your car because if they were to get in an accident your
insurance rates will go up not theirs. You also need disability insurance in the event
you are unable to work due to injury or illness. Ideally, you should have coverage that
will pay you seventy percent of your income if you were to become disabled. If you rent a
house or apartment, you need to have renters insurance. The reason for this is in case a
fire breaks out or you are robbed. This way any of those things happen you will be
covered.
INVESTING:
When you are thinking of making a investment plan the first thing you should do is to
build an emergency saving fund which is equal to three months of your living expenses.
After you have done this you should take this money and put, it in a money market fund.
The next step in doing this would be to invest in stock and bond mutual funds. Your best
bet is probably index funds since actively managed funds tend to charge higher fee and on
average have not perform any better historically. Invest only in no load funds. If you
invest in load funds you will have to pay hefty fees, which you not need because there is
no evidence that they are better. Don't invest in a mutual fund that charges investors
high expenses. As of this writing,"expense ratios" average about 1.5 percent a year for
stock funds, just under 1 percent for bond funds, and around 0.6 percent for money market
funds. Find a fund that charges you lower expenses. Sign up for an automatic investment
plan. This kind of plan would allow you to have small amounts of money, for example
$25.00 each month withdrawn from your bank account or paycheck and funneled into a mutual
fund.
TWO THINGS NOT TO DO:
Rental car collision insurance: If you've ever rented a car, you were probably asked if
you wanted to buy the collision damage waiver, or CDW. Next time, do a little research in
advance. Review your credit card agreement to see if you are already protected when you
charge a car rental on the card. And if you already have collision coverage on your own
cars, find out if your policy extends to rented cars. Warning: This is different from
rental liability insurance, which you may need if you don't own a car or your auto policy
doesn't cover rented cars.
Flight insurance: If you need to insure your life, the cheapest way to do, it when you're
young is to buy a term life insurance policy. If you don't need to, you shouldn't waste
money by buying life insurance at a vending machine in the airport. Sure, it's tempting
(this type of insurance plays on your fear of flying) and, it also seems cheap, but, it
doesn't make sense. Your chances of slipping and killing yourself on the ground are much
greater than your chances of dying in an airplane crash. Besides, you may already be
covered; some credit card companies give you automatic flight insurance if you charge
your tickets on their card.