Tips from the Presidents: How to Create a Solid Financial Plan

in Financial Planning by

KEY POINTS
  • Take some financial wisdom from our founding fathers this President’s Day.
  • Why you should pay off your debts and save effortlessly with a 401(k).
  • How to weather the ups and downs of your financial life.

“Wealth can only be accumulated by the earning of industry and the savings of frugality,” said John Tyler, the tenth U.S. president.

In honor of President’s Day, let’s take a moment to reflect on the wisdom of our forefathers. If the American Dream is about making something of ourselves and living financially healthy lives, then it seems reasonable to say that a stress-free retirement is that dream coming to fruition.

We all want to retire comfortably one day, and many Americans actually have the power to make it happen if they set clear saving and investing goals – and work hard to meet them.

As Benjamin Franklin famously said, “A penny saved is a penny earned” — and he reportedly retired at age 45, so he’s probably someone we should all listen to! This President’s Day, we could all afford to take a cue from America’s leaders and founding fathers. And with these three tips, you’ll be that much closer to the financial freedom you’re dreaming of:

1. Pay Off Your Debts.

Our 19th president, Rutherford B. Hayes, once said, “Let every man, every corporation, and especially let every village, town, and city, every county and State, get out of debt and keep out of debt. It is the debtor that is ruined by hard times.”

Paying off credit card and student loan debt is something many Americans struggle with, but it’s important to focus on relieving those financial burdens as early as possible. Interest payments — especially when you’re paying high rates, such as on credit cards — can significantly cut into your ability to save for your family’s future. Prioritize paying down debts with higher interest rates, and look into refinancing your student loans or mortgage if you think you’ll qualify for a lower rate.

2. Save With An Eye Toward The Future.

Once you’ve been able to pay off any high-interest debts, you have a great opportunity to start exploring and growing your personal wealth. As Calvin Coolidge, the 30th U.S. president, put it, “There is no dignity quite so impressive, and no independence quite so important, as living within your means.” Including retirement saving in your budget today is a great step toward stress-free living in your golden years.

It’s a tragedy that only 31% of America’s labor force contributes to a 401k. If your company offers one, take advantage of it! Make it easy on yourself by setting up automatic investments and allocating any raises or bonuses you receive directly to your investment account.

3. Set A Financial Plan – And Most Importantly Stay The Course.

Said our sixth president, John Quincy Adams: “Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.” Saving for your financial future is a long-term goal, and you need to treat it as such. With properly diversified assets, your portfolio will be more able to weather financial storms like market volatility or recessions. These things will happen as they always have, but it’s important to keep that long-term view, and resist the urge to sell off your assets (at a loss) when they’re not performing as well as you’d like.

Things Do Not Happen. They Are Made To Happen.

As John F. Kennedy, 35th U.S. president, once said, “Things do not happen. Things are made to happen.”

You are in control of your own destiny. Take inspiration from the wisdom of former American leaders and use it to prepare your financial future. By making a few sacrifices today to pay off your high-interest loans and make saving and investing a part of your budget, you’ll move the needle toward achieving financial health and fulfilling the American Dream.

Need a hand to get started? Our advisors are ready to help and offer a free consultation to chat with you about your financial plan.

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Bill Harris

Bill Harris

Bill Harris is the founder of Personal Capital. He has spent 25 years building financial technology, notably serving as CEO of Intuit and PayPal. He is the founder of several financial technology companies and has served on the boards of numerous technology firms, such as SuccessFactors, RSA Security, Macromedia, and Answers.com.

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