Preparing For Your Financial Future By Dan Kalm

When most of us think of investing, we immediately think of investing for retirement. While that is an important aspect to be considered, there are other pieces of the puzzle that are also important. Establishing a budget, investing early and regularly, and saving for post-secondary education should also be considered.

Establish a budget - Establishing a budget is a great first step in planning your finances. A budget is a useful tool for recording all of your income and expenses. By writing down how much money you earn and spend each month, you can see where your money is going. This will assist you in being able to prioritize your expenses and needs. Any money left over can be used for saving and investing. Even a small amount of money invested regularly can help.

Invest early and regularly, even small amounts - One reason to start a regular investment program early is to give your money as much time as possible to grow through compounding. If you haven’t started investing yet, then consider starting now and getting into the habit. Just remember that the amounts you invest do not have to be large, especially if the money is taken directly out of each paycheck. You will be surprised how little you miss money you don’t see. If you’re already investing every month, look for ways to contribute more through bonuses and monetary gifts.

A hypothetical example - The value of starting early is illustrated by a 25-year-old investing $2,000 per year for 10 years at a hypothetical 8 percent fixed rate of return with all gains and dividends reinvested. This 25-year-old would accumulate $314,870 by age 65. A 35-year-old investing $2,000 per year for 30 years and reinvesting all gains and dividends will have $244,692 when he or she reaches 65. These hypothetical examples are for illustrative purposes only and are not intended to represent or imply the actual performance of any specific investment.

It is important to note that any investment involves risks that may result in the loss of principal and there is no guarantee that the strategies illustrated will produce positive investment results.

College tuition planning - Preparing for your children's or grandchildren's college education is important, especially when tuition costs are rising every year. One possibility might include investing in a Coverdell Education Savings Account, which allows tax-free withdrawals for qualified education expenses. These can include room, board and tuition for elementary, secondary and higher education. You might also want to look into prepaid tuition plans. Many states offer programs that allow parents to lock in the cost of tomorrow's college tuition and fees for about what it would cost today.

State Farm securities products are available through prospectus by registered representatives of State Farm VP Management Corp., One State Farm Plaza, Bloomington, Illinois 61710, 1-800-447-4930 (Mutual Funds) or 1-888-702-2307 (Variable Products). Please read the prospectus and consider the investment objectives, risks, charges and expenses and other information it contains about State Farm securities products carefully before investing. AP2009/02/2199

Securities, insurance and annuity products are not FDIC insured, are not guaranteed by State Farm Bank and are subject to investment risk, including possible loss of principal.

A regular investment program does not assure a profit and does not protect against loss in declining markets. A regular investment program involves continuous investment in securities regardless of fluctuating prices. You should consider your financial ability to continue purchases through periods of high or low price levels.