15 Ways to Do Your Financial Planning Better

Financial Literacy financial planning

When you get down to basics, financial planning is simply the process of setting financial goals and creating a plan for how you’ll meet those goals. That seems innocuous enough but it can admittedly get a little complex, and sometimes overwhelming. 

Yet short of a winning lottery ticket or an unexpected inheritance, it’s virtually impossible to improve your financial situation without planning. The answer may well be in taking a few key steps to improve your financial planning process. 

Here are 15 ways you can do just that and reach your money goals a lot faster. 




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1. Set Financial Goals

No matter where they are in life, people hope to have something ahead to look forward to or plan for, and those events might warrant realigning current financial goals. Some people may even be setting those objectives for the first time. Whether you want to go to college or graduate school, start your own business, raise a family, buy a house, or retire in comfort, your financial situation dictates whether and how you reach those goals. 

Setting appropriate financial goals for yourself can help you reach them by creating a workable plan that you can follow and a way to monitor how close you are to meeting that goal. Moreover, financial goals help you increase and maintain your level of motivation to follow that action plan. 

2. Create a Budget

No matter what kind of budget you’re interested in establishing for yourself, the process can seem a bit complex at first but it doesn’t need to be an overwhelming challenge. At its core, your budget is based on factors you already know: your current and expected income, your fixed bills, your recurring variable bills, and any future one-time expenditures that you can anticipate. 

To simplify the process, break the work into segments and tackle them on different days. And if the thought of budgeting with a pen or pencil and paper makes you a little dizzy, why not explore a digital approach? You can find lots of freely available budgeting tools online. If you’re familiar with Google office suite apps, you can also search online for budgeting spreadsheet templates that might simplify your planning process. 

3. Track Your Spending

Lots of people struggle with controlling spending habits, but there’s no doubt that it’s one of the easiest ways to improve your cash flow and work towards your financial goals. Tracking spending helps you spot the areas in which you can trim expenses and purchases, which means you can then redirect those funds to more productive uses. 

As with budgeting, you can go with an analog or a digital approach. There are lots of expense tracking apps available online, some free and some premium. Or you can pick up a small, inexpensive notepad to carry with you and simply jot down what you spend every day. The true value of tracking your spending lies in the analysis of your habits, so be prepared to spend some time weekly or monthly reviewing your expenditures to spot where you can cut back. 

4. Reduce Debt

Focusing your attention solely on ways to increase income in order to meet your financial goals can be tempting. It seems like the most direct path to achieving those objectives. However, most people find there’s only so far they can ethically and legally increase their income. One area that occasionally gets short shrift in financial planning is reducing debt. 

It might not seem as exciting as creating new streams of passive income, but debt reduction is a powerful way to help make financial planning. By trimming the amount you spend each month to pay off loans and credit cards, you free up important capital to put to more constructive use, such as investments or savings. 

5. Increase Savings

Given the ways in which life can throw some unpleasant surprises our way, it’s not so hard to see why it’s important to create and build up your savings. That’s especially true in stressful economic conditions, such as where a recession may be looming around the corner. 

One of the best ways to begin saving is to look for a bank account with automatic savings tools built in. For example, with some checking accounts you can round up each purchase to the nearest dollar and put the difference in your savings account automatically. You may also be able to direct your bank to divert a certain percentage or dollar amount of each paycheck to your savings. That way, you’ll continue to build your savings without additional effort on your part. 

6. Invest in Your Future

Savings accounts and reducing debt payments are important, but if you want to provide for your retirement, build true generational wealth and achieve other long-term financial goals, you’ll probably need to invest your money in some way. Investments help your assets grow faster and more significantly than they do in a typical savings account. 

However, getting started with investing can be a daunting prospect. To begin educating yourself, use trusted resources to learn about investing in stocks and ways you can safeguard your investments in a challenging economy

7. Plan for Retirement

Most of us hope to eventually stop working one day and enjoy our golden years. That means we’ll need to plan for our living expenses and retirement goals, too. 

One of the first steps in financial planning for your retirement years is to address your sources of income. Between Social Security, your job’s 401(k) or your Roth IRA, and other investments, you’ll need to ensure you have enough money to cover living expenses and any travel or other goals you’d like to pursue. It’s also crucial to think about how you plan to manage your debt in retirement

8. Protect Your Finances

Another aspect of financial planning that you’ll want to consider is how you’ll protect your investments, your assets, and your income. In most cases, that means insurance. While you’re working, it’s critical that you protect yourself and your family with long-term care and disability insurance policies, to augment whatever coverage you might have from your health insurance policy. 

Insurance is also crucial during your retirement years. You’ll be less able to replace a source of income if something unfortunate occurs, so you’ll want to ensure you’re covered with health insurance and long-term care and disability coverage, along with the usual life, auto, and homeowner’s insurance. 

9. Evaluate Your Insurance

While it’s important to get and maintain insurance coverage, it’s also crucial to periodically review and evaluate your coverage limits and policy terms. That’s because life events can radically alter your financial landscape. Just as you want to ensure you’re carrying enough insurance to address likely risks, you also want to make sure you’re not carrying too much. 

Given the myriad ways in which personal decisions, health issues, and career choices among others can impact your finances, it’s smart to take some time to sit down with an insurance professional every so often and evaluate your current coverage. 

10. Review Your Credit Report

The U.S. government gives its residents the right to one free copy of the reports from each of the three major reporting bureaus (Equifax, TransUnion, and Experian) every year. You don’t need to pay a commercial service for this information. Simply visit AnnualCreditReport.com, or if you prefer call 1-877-322-8228.

Once you acquire your credit reports, review them carefully for any errors. Look for loans or accounts that you paid off that may be listed as unpaid, any accounts marked closed that are actually still open (or vice versa), and delinquencies that are listed in error. Not every creditor will report your account to each agency, so your reports may contain different items, but you do have the right to request corrections for erroneous information. 

11. Improve Your Credit Score

Your credit scores (you have more than one) will play a large part in determining your financial future. Whether you’re approved for a loan, what the terms will be, how much interest you pay, and more can all depend on the strength of your score. 

There are many strategies you can employ to improve your credit score. Start by disputing errors on your credit report. Additionally, pay every bill on time each month. Set up automatic bill pay for recurring debts to make sure you aren’t late. Avoid applying for too many new credit accounts at once, and don’t close out old credit accounts once they’re paid off. These steps will help you improve your score and meet your financial goals. 

12. Refinance Your Loans

The loans that make modern life possible also carry costs that can have a significant impact on both your current cash flow and your financial planning process. Between the interest rate and the other terms associated with your loan, there’s quite a bit of room for adjustment there. 

If your credit rating has improved since you first took out the loan, it may be a good idea to inquire about refinancing the loan. You may be able to get your interest rate reduced, which could lower both monthly payments and the total amount owed. 

Check your loan documentation to see if there’s a prepayment penalty first, then shop around for a new lender. Even if you do owe your current lender a fine for paying the loan off before schedule through a refinancing, it might be offset by what you’d save in the long run. 

13. Negotiate Bills and Expenses

Due to a combination of factors including the COVID-19 pandemic, supply chain disruptions, and more, the price of everything from eggs to your next car is rising. That’s why it’s important to negotiate and trim your bill expenses wherever you can. 

At the grocery store, you can look for cheaper alternatives, including store brands; choose less expensive cuts of meat; eat vegetarian meals more frequently; watch your purchases and serving sizes to cut back on wasted food; and clip coupons where possible. 

For cell phone bills, try calling your carrier and announcing your intention to shop for a better deal unless the carrier can cut your plan’s costs. The same strategy may also work with other providers where you have alternatives, such as newspapers and media website subscription plans. 

14. Use Technology to Manage Finances

In many ways, life is undeniably more complex these days than it used to be. Don’t hesitate to explore ways in which technology can help you manage your finances and achieve your financial goals. 

Direct deposit, automatic bill pay, automatic savings plans, and more can all help you enlist technology to make implementing your financial plan more efficient. You can also use financial tools for budgeting, bookkeeping, tax preparation, refund hunting, and more. Using technology to keep your financial plan going strong and manage your money more efficiently will help you meet those goals faster and with less stress. 

15. Seek Professional Advice

Personal finance is a complex topic, and the rules seem to change frequently. To stay on top of things and make sure your money is working as hard as possible, consider seeking the input of professionals such as financial advisors, tax attorneys, and others who can help you make the best possible money decisions. 

The right professionals are trustworthy, skilled, and experienced advisors who can help protect your money from unwise or risky investments and more. Consider seeking the help of an investment professional who’s registered with FINRA to give your financial plan a tune-up. 

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