A Step-by-Step Guide to Creating Your Own Financial Plan
posted on Wednesday, January 27, 2021 in Financial Tips
A financial plan provides an overview of an individual’s short and long-term goals. It contains information about their savings, investments, debts, salary, and so on. All of these work together to help them achieve financial success. So, whether you want to start a business or are saving for retirement, having a strategy will help put your plans in motion. Read on to find out how you can create a solid financial plan.
Set a Budget
Budgeting is a great way to avoid overspending. You can start by creating a list of your monthly expenses and setting a spending limit for each. The 50/30/20 budgeting principle is one strategy you can explore. It works by allotting 50% of your after-tax income to your needs (e.g., rent, grocery, and housing), 30% to your wants (monthly subscriptions, dining out, and clothes), and 20% to savings and debt repayment.
It’s also best to document your monthly cash flow. This allows you to see how much money you’re saving on a monthly basis. The goal is to have a surplus that you can use for your personal savings plan.
Figure Out a Debt Repayment Strategy
Having debt can hold you back from achieving your goals. That’s why it’s crucial to find a sustainable repayment plan that will work for you. One effective strategy is by paying more than the amount due each month. During this period, refrain from using your credit card and taking on more debt. With consistent effort, you can enjoy a debt-free life and put your money in greater investments.
Start a Retirement Fund
Do you dream of buying a house by the lake or traveling the world when you retire? Unfortunately, your pension alone will not be enough to cover this kind of lifestyle. If you want more financial freedom in the future, start saving at an early age. There are different ways to do this, like placing your savings in credit union IRA accounts.
Apply for Insurance
The aftermath of accidents and disasters can put a hole in your savings. Protect your assets and finances from emergency expenses like these by getting insurance. Consider applying for one that covers important aspects like health, car, home, and business.
Put Your Personal Savings Plan Into Action!
At Community 1st Credit Union, we can help you mobilize your financial plans. By becoming a member, you can gain access to various services like our retirement programs and savings accounts. If you have questions or concerns, give us a call or fill out the form on our website.