To be prepared for a bright future—as well as the
unexpected—careful financial planning is essential not only for businesses but
for individuals. It’s not just about saving for retirement, either. Having a
well-thought-out budget also allows you to pinpoint where you may be spending
more than you’d like and make wise decisions when it comes to big-ticket
purchases.
1. Understand the expenses associated with your current
lifestyle.
Before you can properly develop a financial plan, it’s
critical that you understand your current living expenses based on your current
lifestyle. It’s hard to make incremental changes until you understand where you
are right now. - Meredith Moore, Artisan Financial Strategies LLC
2. Document your monthly expenses.
A financial plan can start with something as simple as
documenting your monthly expenses—utilities, mortgage, insurance and so on—in a
spreadsheet. Sum the expenses for each month to determine your monthly
obligations, and average the expenses by line so you can estimate the average
cost of each item. Then, compare your expenses with your income, and be
diligent in paying down the highest-rate obligations first. - Sheryl J. Moore,
Wink, Inc.
3. Gather several months of data.
Make sure you begin with good data. Before you start to
plan, keep track of all expenses—cash, credit card and banking transactions—for
several months. In this way, you can see how you are spending your money over
time. In addition, I encourage people to be more conservative than necessary.
For example, build “padding” into your budget for miscellaneous or unknown
events that will inevitably occur. - William Lieberman, The CEO’s Right Hand
4. Get a bird’s-eye view of your finances.
Compile all your accounts and bills in one place so you can
see your entire financial picture. By tracking spending, debts and assets in
one place, you can make more informed decisions about short-term spending and
long-term goals while easily making adjustments as things evolve. - Marthin De
Beer, BrightPlan
5. List your debt and income sources.
In my experience with entrepreneurs and investors, making a
plan is simple. It’s like using a map: To get to your goal, you must know both
your current location and your final destination. Taking a sober look at your
current financial position by listing your debt and income sources, as well as
your goal at a specified time, sets you in the right direction. Review it
monthly and modify it accordingly. - Dr. Betty™ Uribe, Effectus Enterprises,
LLC dba Dr. Betty Uribe
6. Inventory your assets each year.
Take inventory of your assets at the end of each year to
make sure that your financial assets are higher than the previous year. This
requires looking at how much you put into savings each month. However, if you
invest in the stock market and your year-end assets are lower, stick with your
stocks and your plan—historically, 100% of downturns have proven to be
temporary. - Robert Zuccaro, Target QR Strategies
7. Keep a rolling budget and forecast.
You can’t expect to foresee every obstacle in your financial
future, so make sure to keep your budget flexible, not only relying on the
numbers you see in front of you but also allocating funds for surprises.
Keeping a rolling budget and forecast will keep you on top of the positive and
negative fluctuations that are bound to happen. - Roy Ferman, Seek Business
Capital
8. Balance short- and long-term goals.
If it’s your first time developing a financial plan or
budget for your company or yourself, make sure that you balance short-term and
long-term goals. While it’s tempting to fixate on the upcoming fiscal year,
it’s critical to understand your long-term goals so that as you plan for today,
you are also making progress toward your tomorrow. - Sonia Webb, Avanade
9. Follow the 50/20/30 rule.
I always recommend—and personally stick to—the 50/20/30
rule. Spend 50% of your after-tax pay on what you need. Spend 20% on things
that you want, then use the remaining 30% to add to your savings and
investments or to pay off debt. - Sean Brown, YCharts
10. Set up separate bank accounts for different purposes.
One account should be used for normal monthly expenses. This
is where the bulk of your paycheck should go, and preferably you’ll pay
recurring bills via auto-debit. Another account should hold any bonus or extra
money for a rainy day or a big expenditure. A third account is the one you pull
cash from weekly. Feed all these accounts via automatic payroll deposit, and
then adjust deposits as needed. - Chris Tierney, Moore Colson CPAs and Advisors
11. Pay yourself first.
Don’t be shortsighted! Pay yourself first. Save money in a
retirement account and cut your discretionary spending first. Simultaneously,
find ways to grow your income. In the gig economy, there’s no shortage of ways
to earn extra money and learn new skills. - Mark Paller, Paller Financial
12. Leverage dedicated budgeting apps.
Setting up and sticking to a budget is like dieting: If you
set unachievable goals or, worse, nonspecific goals, it will be hard to stay
the course. To keep yourself accountable, I recommend using Mint, PocketGuard
or another budgeting app to track your budget and daily spending habits. Don’t
worry if you miss your goals. Like dieting, taking action when it comes to your
finances is half the battle. - Catherine York Powers, Constant AI
13. Be sure to maintain emergency funds.
Always keep an emergency backup fund, and save as much as
you reasonably can. There are so many amazing and innovative ways to save and
invest—the rapid rollout of fintech offerings can really motivate you to save,
set goals, invest and more. Prioritize a variety of savings accounts for
emergencies and goals—whatever motivates you. - Julio Gonzalez, Engineered Tax
Services Inc.
14. Decide on a fixed amount to save each month.
All financial plans start with the same thing: money.
Budgeting for and planning how much of your income you will save is a key
foundation of any financial plan. Using a percentage of income or a fixed
dollar amount each month is an easy way to get started. And don’t forget to
increase these savings amounts as your income increases. That can help prevent
an unexpected shortfall in the future. - Will Duffy, WD Wealth Strategies
15. Don’t try to make it perfect.
Do not let perfect be the enemy of good. Your budget will
never be perfect—life has a way of throwing us curveballs, so do not let
perfection keep you from getting started. An easy way to begin that avoids
combing through all of your bills is to take your net income and subtract any
regular savings. The remainder we can assume is your spending, which can be
refined as you move forward. - Matt Masterson, RegentAtlantic
16. Find an advisor who specialized in goals-based
planning.
First, define and prioritize your goals. This will help put
financial decisions into perspective.
Work with an advisor who specializes in goals-based financial planning
and has the right technology and calculation engine behind the scenes to run
easy-to-navigate options and scenarios for you. - Kirk Badii, Badii Group
Private Wealth Management
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