With bills streaming in every month and tempting new items available at every store visit, breaking the cycle of living paycheck to paycheck can be difficult. Spending is just so much easier than saving. But don’t worry--it’s still possible
to retrain your impulses to align with your goals.
Effectively managing money is a learned skill. With the right structure in place, you can know where your money is going, and use if for things that matter. Since October is financial planning month,
we wanted to give you some tips on getting started.
What is financial planning?
Financial planning is exactly what it sounds like: creating a plan for your financial future. It takes into account your current situation, your goals, and methods to achieve them.
Your financial plan is an outline that guides you into the next phases of life, so you won’t be surprised when you get there. It should deal with everything from retirement savings to building an emergency fund for when something unexpected happens.
By mapping goals out in advance, you’ll reduce the stress that comes when it’s time to make decisions. That’s the power of preparing: more confidence and better choices.
You can get started today!
We understand how making a plan can feel overwhelming. It’s not easy to look five, ten, fifteen years down the line and figure out where you might be. It’s even harder changing existing spending habits. But both are necessary. You need to
know where you’ve been using the money, and where you are going. Luckily, financial planning doesn’t take long to learn, and you don’t need to be an expert to start. All it takes is some basic knowledge and a motivation to get things
Decide on your goals
Outline everything you want to accomplish, short-term, and long-term. This might include buying a car, paying off debt, or saving for retirement. It might also include smaller things like putting money into a savings account or saving funds for
a summer vacation.
Also, consider how your finances now might change in the coming years. For example, if you plan on starting a family, you’ll have to take into account the additional costs and possibly start saving for them.
Evaluate your current situation
To create a plan that works, you need a good understanding of where your money is currently going. Take a month to track every time you spend money. You can do this on paper or through an app, but be sure to record every purchase and amount.
At the end of the month, sit down and add up the totals. Separate purchases into categories and figure out what your most frequent expenses are. At this point, you should be able to identify a few places to cut costs. You should also identify
activities and purchases you want to continue. Be sure to include these in on your plan.
Make the plan
After you understand your goals and current expenses, you can figure out ways to bridge the gap. If an item you’re spending on doesn’t line up with your goals, cut it. Everything you spend should be intentional, either because it helps
you reach your goals, or because you decided it was worth it.
You want to be smart, but also be careful not to cut everything. Your plan should be achievable and maintainable. Don’t set your sights so high you make yourself miserable, or you’ll quickly abandon it.
Revisit the plan
Your plan will likely need to change as life circumstances change. Big events like having a baby, switching jobs, or buying a house can add new obligations and may hamper your ability to meet the goals you’ve set. It’s ok to revise the plan
to reflect what is really going on in your life. You don’t want to be stressed out about keeping up a goal you can no longer meet.
When you should use a financial advisor
If you still feel overwhelmed, remember you don’t have to do it alone. Seeking the help of an advisor can be very beneficial. They can identify problems you don’t see and will have more knowledge to inform you about ways to improve.
The largest benefit of talking to a professional is their experience. Often, they can help you with the parts that are harder to figure out on your own, like investing. They understand what makes a strategy work and will help you find what will grow your
money long term.
Some advisors even specialize in specific areas, like helping people plan for taxes, understand the expenses of starting a family or map out what they will need for retirement.
Denali can help.
We help members in all stages of life understand what steps to take. Whether you want to open a savings account, buy your first home,
or open a checking account—we’ve got you covered. With personalized support along the way, you can rest assured knowing your decisions have been
well informed and will benefit your future.