Five Tips for National Financial Planning Month
October is National Financial Planning Month. With the holidays right around the corner, National Financial Planning Month serves as a great reminder to revisit (or create) your financial plan and take steps to improve your overall financial health.
Think Long Term Instead of Instant
A financial plan is a roadmap for how to manage your money so you can achieve your future goals. Don’t worry if you don’t have a financial plan. You’re not alone. Countless studies have shown that people are hardwired to prioritize instant gratification over long-term fulfillment. For example, a study in The American Economic Review found that when offered a choice between $50 now and $200 in two years, most people chose the immediate $50. While it’s nice to enjoy instant gratification occasionally, too much can lead to poor financial, social and health outcomes. Planning for the future can generate significant returns and reduce your stress in the long run. And it’s never too early or too late to start.
Create or Revisit Your Financial Plan
Creating a financial plan doesn’t have to be complicated—you can develop one yourself or consult a professional. Start by thinking about your short-term financial goals. Do you want to get out of debt? Do you want to spend less this holiday season? Now determine your long-term financial goals. Do you want to build up your kids’ college funds? Do you still want to retire by a certain age? Overall, you need to have a clear picture of your income, spending habits and savings. Here are five easy tips to get started.
- Write down your short-, mid- and long-term goals
Get motivated by writing down three different types of goals. First, set some smaller or more immediate goals, like establishing a budget, getting out of debt or saving up for a vacation. Mid-term goals can include saving for a house, starting a college savings plan for your kids or paying off your student loans. For most people, the biggest long-term goals are saving enough for retirement and creating a plan for long-term care.
- Track your money and start budgeting
Now that you’ve set some goals for yourself, make them happen by keeping track of your monthly spending and finding ways you can save and budget. Free budgeting apps like Mint make it easy to connect and view all your accounts in one place, create smart budgets and even monitor your credit score.
- Plan for the unplanned
One thing is certain—your plan will never go exactly as you planned. Make sure you’re covered by starting an emergency fund, getting the right insurance, and protecting yourself and your family against identity theft.
- Save for retirement
While retirement may seem far away, building wealth takes time. Make sure you’re prioritizing your future self by optimizing your contributions and taking advantage of any employer benefits.
- Keep reviewing your plan
Once you’ve established your financial plan, it’s important to review it regularly and make any necessary adjustments. A good rule of thumb is to assess your financial plan a few times a year and after any major lifestyle changes, such as moving, getting a new job, getting married or having kids.
Visit the Allegiance Bank Financial Education Center for more financial planning resources. You’ll find topics ranging from healthy financial habits and debt management to budgeting and identity protection—and more.