It is a dream of every individual to be financially successful. It is however imperative to note that financial success calls for proper planning on the financial expenditure. It should be noted that financial success is not the amount of money and assets held but instead refers to the ability to control money. The choices and priorities made in different stages of life plays a great role in determining individual’s financial success. For instance, I must set clear and achievable goals in different stages of my life. In my 20s when I get my first job, I will build an emergency fund. This is because there are many uncertainties in the first years of unemployment (DOUGLAS and FRANKLIN).  Job loss and other emergencies are likely to happen in the first years of employment and hence prudent to have a strong saving culture.  It is also at this age that I will start saving for my retirement. In addition, since the financial obligations are minimal it is at this age that I will spend some of my earnings to go to vacations and enjoy myself.

At the age of 30’s and 40’s will have marriage partner and possibly children to bring up. This means that financial obligations are accumulating and hence more efficiency is required in financial management. It is at this point that ne should make viable investment decisions. It is also essential to increase saving plans such as insurance and retirement saving schemes. At this age, offering oneself to charity is also recommendable and avoids unnecessary spending such as impulse-buying. I will also open an educational saving plan for my kids to ensure that they get quality education.  It is also prudent that all health concerns for me and my family are addressed at this age through comprehensive health covers. By the time I retire, I will have improved my creditworthiness and also saved enough for my retirement.

Keeping track of the daily spending and pre-planning daily expenditure is essential for financial success. This ensures that one lives within their means and one can easily account for every penny. I expect to get a salary of $75,000 per month in my first job in the banking industry. This income will be used to pay my rent in Denver and also pay other loans. All the monies will be used to meet the financial position I aspire to reach before my retirement. What is important to me is ensuring that by the time I retire, I will have educated my kids and also complete my mortgage.

Take home pay

Assuming that my beginning salary is $75,000 per month, the net pay after paying taxes, education loans and other deductions except housing is $ 39,116.54. After deducting a house rent in Denver that is estimated at $1200 per month, the amount remaining for consumption and saving is 37,916.54. The percentage of my gross salary that I take home after all these deductions accounts for 50.6% of the gross pay.

Budget and living expenses

A budget is an important tool that helps in realizing financial success. A budget will help in ensuring that only the viable and essential financial spending occurs. The following is my sample budget of my $39,116.54 net income;

It is evident that the rental rates in this region are quite high compared to the budget. The budgetary estimates also exceed my net pay and hence I need to adjust my spending to ensure that I live within my means. It is therefore prudent that I become proactive and make choices that will help supplement by budget (DOUGLAS and FRANKLIN). Since I have to maintain my privacy, I will not look for people to cost share the rent. Instead, I will look for a house near my work station and ensure that I reduce on transport cost. I will buy a bike that I will be riding to the office and back hence reduce the public transport cost. This will also help in ensuring that I get to the workplace early enough since I will not be tied in traffic jams. The saved transport cost will also increase my savings since I intend to buy a new car as I progress in my career.

Credit and loans

Credit and loans are integral part of people who want to develop and achieve financial success. As outlined in the reflection section, I intend to build a strong credit card that will enable me borrow funds for development. I will tend to create a good climate for credit and loans through ensuring timely loan repayments. For instance, my higher education loan will be settled on time to create a good image to other lenders. I will work towards ensuring that my credit score as outlined by FICO score meets expectations of financial lenders. The borrowed money will be used for investment and other personal development projects.

Credit and loans requires a certain degree of trust and commitment. It is on this premise that I must ensure that the all my credit cards are up to date and genuine. I will also ensure that I have a program that ensures that all the debts are paid on time. The more the variety of debts and a proof of timely payment increase my chances of borrowing more funds. It will therefore be my primary role to ensure that my credit score card meets the expected standards.

Long term saving and investment

Developing a saving culture at an early age is essential since it lays a foundation for retirement. Also savings are also instrumental in ensuring that one does not suffer more in case of emergencies such as illnesses and job losses. As outlined in the reflection section, I will ensure that I have a saving plan that can cater for my needs for a period not less than six months.  A saving plan with a leading bank in the United States will have an interest of 1.75%. This is a kind of investment that will also lead to more financial success (MEYERS and JOYCE). Besides the bank savings accounts, I will also work on a retirement saving scheme. Retirement schemes are essential investment avenues especially for long term investments.

I intend to pursue a career in the private sector and hence I will have a 401k retirement scheme. It is evident that the private sector has better paying jobs compared to the state governments’ jobs and hence one will have better terms. Unlike in 403b, the 401 k will give me an opportunity to take charge of my retirement. It will be purely my prerogative to determine how much I need at retirement. I will also benefit from tax defers since my contributions to this saving plan will be deducted right from my paycheck.

As aforementioned, my retirement plan will involve 401k plan. The plan will involve mutual funds of both stocks and bonds. To avoid much risk, I will opt for target-date mutual funds since they are less risky and also will save much of my time. It is also essential noting that this plan will also enable me meet my retirement objectives as they allow one to invest until the planned retirement age. Also, the target-date funds will enable me diversify my portfolios to include stock funds, bond funds and other alterative assets. This implies that I will be able to avoid some risks in time of market upheavals. The timely dividend payments will also ensure a steady income flow during my retirement. It is also prudent to note that the mutual funds investment in this plan will enable a selection of stocks and bonds that are indexed hence only a selection of the actively managed funds. As a result, it will be hard to incur losses from poorly performing stocks. Given my little experience in finance and investment, I am certain that I will be able to make the best choice on bonds and stocks.

Frequent assessment to ascertain the progress in investment, assets and liabilities will be done annually. Rebalancing portfolio refers to the process of periodically buying or selling of assets to maintain a desired level of allocation. This always play a significant role in reducing risk levels and also put them in checks. For instance, I will ensure that I have a 1:1 ratio of bonds and stocks.

Protecting against adversity

Risks are part of the everyday life. It is for this reason that one should plan for insurance since it has a significant role in financial success. Insurance helps mitigate risks that would otherwise have adverse effects on financial success journey. Apart from health and car insurance, it will be essential to consider other forms of insurance as life moves on. At the age of 40s, it is essential to think of life insurance. Paying life insurance when one is very old is quite expensive and hence prudent to think of it quite early. A choice of permanent or whole life insurance will be the best for me.  This is because it will cover my family when death come knocking. Life insurance is particularly essential considering that I have a family that needs care after death. To ensure that my family maintains the expected living standard, I will ensure that the insurance will be at least 6x my annual earnings. This implies that assuming an average of $750,000 annual earnings, then the insurance scheme should estimate at $4.5 Million at the maturity.

It is also necessary to have general insurance cover that will cater for other adversities not covered in the life assurance and car insurance (MEYERS and JOYCE). Such insurance cover will cover loss or damage of property such as house and other belongings. Also, the policies cover accidents and damages done to third party thus minimizing conflicts with others. I will also consider having a group policy for the whole family to ensure that I will be safe just in case any other member of the family dies or get physically disabled.

Work cited

DOUGLAS, JAMES W., and AIMEE L. FRANKLIN. “Putting The Brakes On The Rush To Spend Down End-Of-Year Balances: Carryover Money In Oklahoma State Agencies”. Public Budgeting & Finance 26.3 (2006): 46-64. Web.

MEYERS, ROY T., and PHILIP G. JOYCE. “Congressional Budgeting At Age 30: Is It Worth Saving?”. Public Budgeting & Finance 25.4s (2005): 68-82. Web.

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