October is National Financial Planning Month, so it’s the perfect time to assess whether there is actually any planning in your finances.
Maybe you’re saving every month, but you don’t know how much. You’re putting money away for retirement, but you’re not actually planning for retirement. You’ve got a couple investments, but you don’t put much time or thought into where you’ll invest next. It’s easy to get bogged down in the day-to-day, but it’s crucial to take a breath at least a couple times a year to make sure your finances are working exactly how you want them to. Here are some tips:
Budget (For real, this time.)
Yes, budgeting can be a pain. It’s one of those tasks that is notoriously started and stopped constantly. But the consistent action of tracking your income and seeing where you spend your money is the groundwork for some serious headway on all of your other financial goals.
You can find countless examples online, but it doesn’t really matter which one you choose. You’ll come across envelopes and spreadsheets and reward systems, but all that really counts is that you find one that works for you. It’s the first step in taking an active role in your financial life because it shows you exactly how your money is behaving at this moment.
Grow Your Savings
Saving is an essential money skill, but you’re missing out on a lot if you stop there. Sitting on a pile of money, big or small, isn’t going to do you many favors. The key is to have a plan for your money. Interest rates are low right now, so if your money is in a typical savings account, it’s simply existing. Investing a portion of it is going to yield you a much better return.
Investment options are wide and varied, so you will have to choose what makes sense for you. Just keep in mind that you should have a purpose, and future goals, in mind for your money.
Set Financial Planning Goals
In order to plan your financial future, you have to set goals and benchmarks. It’s a healthy exercise that keeps you aware of where you want your money to take you. A good financial planning balance is important, so set short and long term goals, and throw in some fun. This is important no matter what stage of your financial life you are currently in, because it teaches you to think about better uses for your money than impulses. Whether you’re just starting out or nearing retirement, setting practical (and even a few lofty) goals for yourself will keep you on track.
Write it Down
From budgets and goals to long-term investment plans, being an active financial planner includes solidifying your plan. Writing it down doesn’t mean you are stuck, so don’t look at it that way. It can be a fluid document, one that adapts with you, but you need something you can refer back to when you’re considering your next step. Take the time to write it down and you are much likelier to have a clear-cut idea of where you are on your financial path.