Using the Internet to Make Financial Planning Easier

Many people find it difficult to shake off the notion that if they’re not wealthy, they don’t need to do any financial planning. Stock market volatility, inflation, changing interest rates, unemployment, illness, and hard times are part of life. To do no financial planning or to let others (your spouse, employer, broker, or financial advisor) do all your planning is to flirt with disaster. Remember that no one cares more about your financial well-being than you do. The Internet makes financial planning easier than ever before.

The Web has hundreds of online worksheets, calculators, and other tools that can easily put you on the right track. This article shows how you can start maximizing your personal wealth by

Analyzing your current financial position: After all, you can’t get to your financial finish line if you don’t know your starting point. The Internet provides many online net-worth worksheets and calculators to make this task easier.

Finding out where your cash is going each month: Your financial wellbeing doesn’t depend on how much you make; it depends on how much you spend. If you don’t know how much you’re spending, the Internet can help you gain an understanding of your spending habits and assist you in creating a budget you can live with.

Deciding your financial objectives: Do you want to purchase a house in five years or to retire early? The Internet can help you achieve your goal by helping you develop a workable plan.

Building your financial base so that you can start accumulating real wealth: This approach to investing offers a diversified system that provides financial growth and protection. Discover how you can build a financial base to maximize your personal wealth. The joys of compound interest The most powerful investment returns are stable, compounded returns. Regardless of what’s happening in the economy or stock market, you can always count on the magic of compounding. Over time, a modest but steady rate of compound interest can build into a sizable nest egg.

Want to be a millionaire? Go to Kiplinger’s Tools at www.kiplinger.com/ tools/planning and click the What Will It Take to Become A Millionaire? link under Budgeting. Enter the required data and then click Calculate. The results show how much you need to invest today to be a millionaire in the future. The Internet provides many online calculators to assist you with calculating compound interest. To use these calculators, all you need to know is the amount you want to save, the average rate of interest you expect to receive, frequency of compounding (monthly, weekly, and so on), and how long you plan to save.

The following Web sites can help you get started: AARP Webplace (www.aarp.org/financial-investsave/Articles/ a2002-10-08-compoundint.html), shown in Figure 3-1, provides information on types of interest and links to a variety of online interest calculators. Dinkytown.net Compound Interest Calculator (www.dinkytown.net/ java/CompoundInterest.html) can show you how the different ways in which interest is calculated affect your savings. Federal Reserve Bank of Chicago (www.chicagofed.org/consumer_ information/abcs_of_figuring_interest.cfm) shows the ABCs of figuring interest. For example, how is the interest you pay or receive calculated? How do these calculations affect your interest? What is the difference between simple interest and compound interest?