Smart Personal Financial Planning: With Real Examples
Planning your finances is essential for building a secure future. Here’s a roadmap to help young adults, especially those between 18 and 27, get...
2 min read
Lisett Comai-Legrand : Jun 1, 2017 7:28:32 PM
Just the act of creating a budget puts you ahead of the game by presenting a clear snapshot of your overall financial situation. Once in effect, a sound financial plan lets you live well within your means while preparing for future goals. If you're not sure how to set up a budget, don't worry--we'll show you how.
Begin by totaling all income from wages, investments and other sources. Next add up your living expenses, including housing costs, food, utilities, insurance and transportation. Don’t forget to factor in what you normally spend on entertainment and incidentals. Finally, subtract your total expenses from income to see where you stand.
A good surplus means you’re ready to firm up your plan. If you’re just squeezing by, or if expenses actually exceed income, some adjustments may be necessary. Consider reducing expenses by cutting back on restaurant meals and entertainment or perhaps even trading down to a smaller car or home. Another approach is to increase income by picking up extra work hours or landing a better-paying job.
When fine-tuning your budget plan and budget goals, it helps to write down long- and short-term goals, and then open specific accounts earmarked for particular savings goals.
Traditional savings and money market accounts can be well-suited for building emergency funds that can be used at a moment’s notice, whereas IRAs, Coverdell Education Savings accounts, and Certificates of Deposit can be better for accumulating funds for longer-term objectives like retirement, education and amassing a home down payment. When preparing for more-immediate goals, such as vacations or holiday gifts, club accounts may provide a convenient option.
These days budgeting is much more user-friendly than in years past thanks to remote banking advances and free money-management programs that let users check balances, make transactions, track spending and manage it all online or on a smartphone or mobile device.
Financial institutions like First Alliance Credit Union can help show you how to set up a budget and make your budget successful through secure remote-banking capabilities as well as with a variety of effective savings and debt consolidation options.
Getting on a budget transforms aspirations into workable goals that can become future reality. Meanwhile, setting up a workable plan can give you some immediate peace of mind knowing your finances are moving in the right direction.
Content provided by Roberta Pescow, NerdWallet
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