Can you handle missing 2 paychecks? Will you be able to retire comfortably? Can you help your children with college? These are just a few of the financial issues we all have. Everyone needs a financial roadmap in this uncertain world. Even if you have the most secure job in the country, you still need to plan for the future.
We can see this from the most recent government shutdown. Many federal employee and contractors thought they had a secure job and steady income, but that wasn’t true. The people who were financially prepared treated the furlough like paid holidays. However, thousands of employees really struggled with the missing paychecks. They wouldn’t have to worry so much if they had a plan. It’s not easy to create a financial roadmap by yourself, though. Most of us never had a personal finance class in school. Fortunately, we live in the information age. Making a plan is much easier now than even 5 years ago.
Today, I’m partnering with Prudential to introduce LINK by Prudential. This is a new tool to help families figure out their financial goals and solutions. This post is sponsored by Prudential, but all opinions are my own.
LINK by Prudential
Now, you don’t have to be a professional money manager to start planning for your future. You can start a free financial check-up by visiting LINK by Prudential and click on the ‘Start Now’ button.
- First, they’ll ask a few basic questions about you and your finances.
- Next, LINK will use your profile to create financial goals and figure out what you’ll need to do to achieve them.
- Last, they’ll propose solutions based on your needs.
I visited LINK and went through the process to check it out. The questions only took a few minutes to answer. You can estimate if you don’t know the exact answer. It’s easy to go back and update the numbers later. Here is our financial situation.
- Monthly household expense: $5,000
- Debt: $184,000
- Household Savings: $2,000,000
- Your annual income before taxes: $60,000
- Risk willingness: 4 (high)
At the end of this first step, LINK will ask you to create an account with Prudential. They will save your profile at that time. Once you have an account, you can log in and see your profile and goals without having to enter all the info again.
Timeline and goals
Next, it’s time to start planning. LINK by Prudential will generate some goals based on your profile. They added 4 goals for me right off the bat.
- Emergency fund – This is how you deal with a few missing paychecks. You need some cash reserves for unexpected emergencies. I want enough cushions to last 3 months.
- Family protection – Can the family handle my absence?
- Retirement – I’d like to retire full time when I’m 55 in Santa Barbara, CA.
- College – We want to help pay for 4 years of education at an in-state public university. I estimated we’ll need $250,000 in 2030.
These are our financial goals and LINK estimated how much money we’ll need to meet them. You can add more goals such as buying a home, saving for a wedding, or having a baby.
After I was done adding my goals, LINK crunched the numbers and identified gaps and offered solutions to help me accomplish them.
From here, I can see that we’re doing well with our emergency fund and retirement savings. However, our Junior’s college fund doesn’t look so good. We probably won’t have enough savings to pay for 4 years of college. Let’s investigate the shortfall and see what we can do to fix it.
Here, I clicked over to review our college savings goal.
Currently, we have $70,000 in our son’s 529 college savings plan. That’s a long way from my estimate of $250,000 to pay for 4 years of college. How can we fix this? There are several parameters that we can adjust. I could increase the age I expect our son to start college to 21. That will give our investment more time to grow. However, I don’t really like that solution. I hope he’ll go to college right after high school. That way, he’ll be able to keep up with his friends. Instead, let’s update the saving goal and increase our monthly contribution.
Update the goal – I estimated that our son will need $250,000 to pay for 4 years of college. However, it was just a guess. Fortunately, there is the ‘Help me decide’ link at the bottom of the page. LINK by Prudential can help fine tune my estimate.
This is great! I could use the exact university our son wants to go to and set a more accurate goal. For now, I used our alma mater – UCSB. We can change that later when our son figures out where he wants to go.
The in-state cost at UCSB is $207,785 which is quite a bit below my estimate. Of course, we’d need to move to California to become a residence before he starts college. I don’t think that will be a problem if he gets accepted to a UC. We wouldn’t mind moving to California in 10 years.
Unfortunately, decreasing the amount needed is not quite enough to achieve our goal. We’ll still be short of this new saving goal. We need to increase our monthly contribution as well. To reach the goal, I should increase our monthly saving from $500 to $760. That’s a significant increase, but a college education is a big priority for us. We’ll have to bite the bullet and do it.
Of course, there are other alternatives to fund college too. If we don’t meet our college saving goal, then Junior will have to work part-time while he attends college. That’s not a bad choice, actually. Kids need to have some skin in the game too, right? Working part-time will introduce him to the harsh working world. He’ll need to learn to work sooner or later anyway. We’ll try our best to save more, but he’ll probably have to help out too.
Lastly, we can review the proposed solution. If you aren’t ready to manage your investment to this level of detail, Prudential can help by connecting you to their professional financial advisors.
It’s not easy to build a financial roadmap if you are not obsessive about personal finance like I am. We are all at different stages in our lives. Our financial goals are all unique to our situation. Even a personal finance blogger like me gets it wrong sometimes. My estimate for 4 years of public in-state college was way off.
LINK by Prudential can help you start off on the right path.
Check them out and let me know what you think. It won’t take long to answer a few questions and see their proposed solutions. Don’t wait. This government shutdown may not be the last and you shouldn’t have to stress out so much over 2 missing paychecks.
Do you have a financial roadmap? Can you handle missing 2 paychecks?
This post is sponsored by Prudential.
The post LINK by Prudential can help improve your finances (sponsored) appeared first on Retire by 40.