Simple Steps You Can Take to Start a Financial Plan Today

11.25.2024 | Category: Build Your Financial Future

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When it comes to building a secure financial future, time truly is money. The longer you put off starting your plan, the more opportunities you could miss to add to your savings or overcome unforeseen obstacles and setbacks, hindering your success.

With that in mind, the best day to get started building your plan will always be today.

But if not knowing where to get started is keeping you from taking the first step, consider examining these areas of your finances first.

4 simple ways to get started

Set a budget

If you don’t have a budget, establishing one should be a top priority for you. When it comes to budgeting, you’ll find a myriad of resources with just a quick Google search. What’s most important is to find one that fits your individual needs and circumstances, so you’ll be more likely to stick to it.

The 50/30/20 rule is one popular approach many people take to establishing a budget.¹ Using this rule, you break down your income into three categories: 50% for needs, 30% for wants and 20% for savings.

Setting up automatic deposits and payments and tracking changes in your income can help you stick to this plan.

Evaluate your debt

Once you have a budget established, you’ll need to evaluate your debt and determine how you’ll pay it off. Like budgeting, you can find many online resources and schools of thought when it comes to managing personal debt.

If you’re not sure how to get started, you may want to seek out a credit counselor through your bank or credit union or the U.S. Cooperative Extension Service to help establish your plan.² Many organizations offer credit counseling at low or even no cost.

Regardless of whether you go it alone or get the advice of an expert, you’ll want to start your plan by knowing your debt-to-income ratio and devising a strategy to pay off your high-interest debt first.

Consider savings and investments

Even if you have little or nothing in savings or investments, you can still develop a plan that may allow you to start building an emergency fund, savings for a big expense and a secure and happy retirement.

If you don’t have financial advisor, you may want to find one to help with this portion of your plan. A knowledgeable advisor can show you the best ways to possibly grow your money over time.

If you’re concerned you don’t have enough money to start investing or to hire an advisor, don’t let that keep you from reaching out to one for help. Many offer low-cost advice and personalized plans for people just starting to save and invest.

Determine insurance needs

Without the protection offered by insurance, a sudden health emergency or death of loved one could put even a well-established financial plan at risk. This is another area where you may want to call in an expert. A licensed insurance agent can help determine which types and how much life and health insurance may be best for you and if you may need long-term care insurance.

Other things to consider

Depending on your personal circumstances, you may also need to add a will or trust to your financial plan and granting someone close to you power of attorney so they can make financial decisions for you if you’re unable to do so.