How to Create and Stick With Your Financial Plan

Face it — most of us spend more time planning our next vacation than we do creating a strategy to improve our financial well-being. According to research1, three in five Americans live paycheck to paycheck and just one in four have a written financial plan.

Just as careful planning can ensure you have a carefree vacation, creating a written plan for your finances can help you establish important goals and work toward building lasting security. If you want to make the most of your money, here’s how to get started.

Know Where You Stand

Many people wonder where all their money goes, and then feel bad when they find themselves struggling. The truth is — there could be many valid reasons for living paycheck to paycheck — you may be carrying an unwieldy debt load, have taken on too much house or car for your income – or need to find ways to earn extra income to improve your circumstances. Once you understand your true financial picture, you can take steps to make it better.

There are many ways to create a budget to track what you earn, spend and save. For instance, this online budget worksheet from NerdWallet uses the 50/30/20 budgeting method, suggesting that 50% of your income goes toward your needs, 30% toward your wants and 20% toward savings and debt repayment. Another strategy is the zero-based budget, which has you subtract all your expenses from your income throughout the month and whatever you have left over must be allocated to something until you get to zero. So for instance, if you have $200 left over, you should put that $200 toward a category such as debt, savings or both.

How You Save and Spend

When you begin working out your budget, record your take-home pay and any other sources of income, your fixed expenses such as mortgage, insurance and car payments, and what you spend on food, entertainment, clothing, etc. Write down everything you can think of. When you’ve done this, spend some time at the end of the week to see if your budget is accurately aligning with how you manage your money.

After a few weeks, you’ll probably see some patterns emerge:

  • Are you spending too much on eating out or coffee runs?
  • Are your car payments leaving you short financially?
  • Do you routinely rely on credit cards if the unexpected arises?
  • Are you able to add to an emergency fund or retirement savings?
  • Do you have more expenses than income?

Once you identify your gaps and opportunities, you can develop an action plan. And don’t feel bad about where you are now. This exercise is designed to help you make your financial life better. If you’re in good shape financially — congratulations. Now you can focus on saving more and working toward your financial goals.

Saving Matters

If you’re not saving regularly, read The One Budgeting Mistake Almost Everybody Makes, by the Money Coach to get tips on how to get on the savings bandwagon. If you don’t have a category in your budget for saving, add one now. Even if you don’t have a lot to contribute, work toward saving a set amount weekly or monthly until you save at least $1,000. Even $50 a month can make a difference over time. Set up automatic payroll transfers to a designated savings account, preferably one not connected to your checking account.

Saving for Retirement

In addition to saving for emergencies, are you saving for retirement? Most working Americans have access to a 401(k), 403(b), or 457(b) retirement plan to helps save for the future. Employers offering 401(k) plans will often match retirement contributions — typically from 2% to 8%. If you’re just starting out in your career—always contribute at least the max of the match, otherwise, you’re just walking away from free money. If you’re more established, work on boosting that percentage over time.

Next Steps

Once you have established some savings strategies, consider the goals you want to accomplish — both short and long term. For instance, do you want to pay down debt so you can do more with your money? Would you like to become a homeowner in the next few years? Are you thinking of starting a college fund for your child? Whatever your goals, your Credit Union wants to work with you. Our teammembers can help with your short-term goals such as paying down debt, or buying a home or car.
We also partner with Balance Financial Fitness Center where you can receive confidential counseling services to help you manage debt, create a budget, prepare for homeownership and more.

For longer-term goals such as creating or reviewing your investing strategy, boosting your retirement savings or managing your estate-planning and insurance needs, our financial advisors* will review your unique situation and help you develop an action plan.

Confidential counseling services to help you work toward achieving your financial goals. You’ll get one-on-one coaching from a financial professional on managing debt, creating a budget, understanding your credit score, preparing for homeownership, and other topics designed to help you build a solid financial future.

Other Resources to Help you Make the Most of Your Money

Get Your Credit Score in Tiptop Shape

Ask the Advisor: Rules of Thumb to Save for Your Future

Buying or Refinancing? Get the Right Home Loan

The Importance of Having a Will — a Personal Tale from The Money Coach

It’s a Money Thing: How to Spot Scams

 

  1. Charles Schwab Modern Wealth Index

*Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with SchoolsFirst FCU to make securities available to Members. Not NCUA/NCUSIF/FDIC insured, May lose value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.

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2 thoughts on “How to Create and Stick With Your Financial Plan

  1. It really helped when you said that three in five Americans live paycheck to paycheck and just one in four have a written financial plan. It shocked me because actually, I’m one of these three people. My girlfriend an I are planning to get married soon, but we don’t have a financial plan yet. We will definitely keep your great tips in mind and will also search for counseling services.

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