1. Write Down Your Financial Goals
The first step on this financial planning journey is to lay your goals out in clear terms. This means that they shouldn’t be loose ideas floating around in your head; you’ll need to put pen to paper and point your efforts at something real.
It’s okay to start this exercise in relatively broad terms. Ask yourself where you want to be in the next five, ten, twenty years. What will it take to get there? A house? A car? The money for early retirement?
Make a list of these goals and try to assign a dollar value to them.
Example
You need $50,000 for a down payment on a house and you want to have this money set aside in five years. This means you’ll need to save $10,000 per year over that period of time. But don’t stop there. Break this down as far as you can take it. If you need to save $10,000 a year, that means you’ll need to save about $833 a month, which is a little over $200 a week.
The further you break these goals down, the easier of a time you may have in finding ways to make adjustments in order to hit your savings goals.
2. Plan for Emergencies
As well thought out as your financial plan may be, life has a way of throwing a wrench into your plans when you least expect it.
Your first line of defense in these situations should be your emergency fund. While your ultimate goal may be to save around six months’ worth of living expenses, you don’t have to hit that number overnight. Put aside whatever money you can spare at the end of each month and designate it for your emergency savings. Even an extra $400 dollars can help you handle things like a flat tire or an unexpected home repair.
If you do run into an emergency expense and you don’t have the savings to cover it, you might want to look into applying for a personal line of credit. It could be a useful last resort to help you handle emergency costs when your savings won’t cut it. Just remember, these loans are meant to be used for emergencies only.
Learn more about what a cash advance is and when you should (and shouldn’t) consider applying for one.
3. Make Debt Repayment a Part of Your Financial Planning Strategy
Another thing that can hold you back from hitting your future goals is a cloud of debt hanging over your head. Before you start working towards your savings goals, you may want to start tackling some of the debt that’s taking money out of your pocket. Debt can have all sorts of negative effects on your financial profile, not the least of which is the way it can impact your credit score.
4. Save Your Money
Once you have a plan in place to take care of some (if not all) of your debt and have some funds saved up for emergencies, it’s time to start working towards some of the larger savings’ goals in your financial plan. Dive into your budget and look for ways to a) cut down on some of your expenses, and b) increase your income.
Increasing your income may seem like a bit more of a challenge, but that doesn’t mean it’s impossible. You might be able to start working on a side hustle, advocate for a raise or promotion at work, or make a jump to a higher pay job. Just be sure to put any extra money you make primarily towards your savings goals.
5. Invest Your Money
If you want to hit long-term financial goals, it helps to have your money do some of the heavy lifting for you. To do this, you’ll need to start investing it. Just make sure that before you start this process, you have a clear idea of what goals you’re aiming at. This can help you figure out how risky or conservative you want your investments to be. Investing, for most, can be overwhelming. It's important to speak to qualified individuals for advice.
If you want to learn more about personal finance, try using a tool like SpringFour to help connect you to useful resources in your area.
If you want to learn more about personal finance, try using a tool like SpringFour to help connect you to useful resources in your area.
6. Frequently Review Your Financial Plan
An important aspect of strategic financial planning is to make sure you’re continuously evaluating your progress. Like we mentioned earlier, setting your plans in motion is only the start of the process. If you want to be successful in the long run, you’re going to need to make tweaks and adjustments throughout the process. When you do check in on your progress, ask yourself questions like:
- Do I still have the same goals as I started out with?
- Have I made progress on paying off my debt?
- Has my income gone up or down?
- Have any emergencies changed my financial outlook?
- Have my investments been successful or not?
Depending on the answers to some of these questions, you may want to make adjustments to your timeline and your goals. A better financial plan may be out there for you if you use your learnings to tweak what you’ve already set in place.
Disclaimer: The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only, and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through FreshStart Blog or CreditFresh website.
