Top 10 financial planning tips

CarolinaFireJournal - Arianna Sims Derrick
Arianna Sims Derrick Abacus Planning Group, Inc.
07/25/2010 -

While saving money is an important part of financial planning, there are other things you can do to put your financial house in order. Here are 10 planning tips to help you accomplish your goals.


Write down your one year, five year, and lifetime dreams and goals, both personal and financial.

 Writing will help you organize and think through your goals. Keep in mind there is research that indicates when several of the five senses are involved, you are more likely to remember something. So if you write down goals as well as discuss them with others, you are more likely to accomplish them. Remember, you need to know where you want to go in order to get there.

Have an emergency fund

Create an emergency cash reserve fund consisting of at least three to six months of expenses.

An emergency fund is for unexpected expenses — for instance, car repair or medical bills — as well as a cushion in case of job loss.  This has become more important over the past two years as the job market has shrunk. 

Check credit report

Check your credit report annually, free of charge, at Everyone is entitled to one free credit report a year. You want to be sure no one is taking out credit in your name.

Eliminate your consumer debt, such as car payments, and also pay off credit cards each month. Consider financing your residence for 15 years rather than 30.

Your monthly consumer debt payments should be no more than 15 percent of your take-home income.

Save for college

Consider saving for college using a 529 College Savings Plan. Each state offers a 529 plan. Companies like Vanguard offer plans as well. In South Carolina, a good choice is the Future Scholar 529 College Savings Plan Direct Program at

Save for retirement

Start early and save systematically with a goal of at least 10 percent of your salary.  Use the Vanguard Retirement Center at as a planning resource.

Life insurance needs

Review your need for life insurance. If someone depends on you for support, you may need life insurance. Term insurance is best in most situations.

Other insurance needs

Review your need for disability insurance. Disability insurance may be more important to you than life insurance.  Studies show you are more likely to become disabled than to die early.

Review your health, home, and auto insurance coverage to insure that you are adequately covered.

You may be the best investor in the world, but if you don’t have adequate liability coverage, one accident could wipe out your life’s savings.

Write or update your will

Review your will and other estate documents with your attorney.

Estate documents give you a measure of control over what happens if you die.  A Durable Power of Attorney allows someone to act for you if you become incapacitated. A Health Care Power of Attorney allows someone to act for you in determining your health care.   These documents, along with a will, give you control over what happens to your life and your assets.  A will also allows you to make decisions about the care of your children at your death rather than letting the court decide.

Arianna Sims Derrick, CFP®, has a BS in Mathematics Education and a MAT in Health Education from the University of South Carolina. Prior to joining Abacus in 2004, Derrick taught math at Midlands Technical College, served as the Director of Orientation at the College of Charleston, was the Principal of Hand Middle School.
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