Most Americans don't believe they need any outside help managing their finances. However, the average American has about $38,000 in consumer debt.
This number might cause some people to reconsider how they deal with their finances daily. But learning to manage your finances might take some work at first. So what are some ways in which you can create a better financial plan for yourself and your family?
If you're clueless about where to start when it comes to budgeting and finances, keep reading to get some ideas about how to pursue financial health and create a better financial plan.
10 Ways to Create a Better Financial Plan
Deciding to get some personal finance help can be intimidating at first, but once you understand the ins and outs, you'll have it down in no time. A better financial plan is right around the corner with a little education and discipline.
Here are 10 important things to remember when you're starting to manage your finances and creating a better financial plan.
1. Have a Vision
Before you begin planning out your finances, you want to set some goals.
Do you want to eliminate your debt? Do you want to save for the future?
Make sure you outline a vision for your finances so you know where to put your money and your energy. Write out a plan and refer to it often so you know how you're doing on your goals.
2. Create A Budget
A budget is the heartbeat of your finances. While some people think that having a budget is constricting, it's a source of freedom. With a budget, you tell your money where to go instead of spending and not knowing where it goes.
One of the easiest ways to create a budget is to look over all your expenses and make a category for each one, such as food, entertainment, and so forth. Decide how much you want to spend in each category and do not overspend each month.
3. Pay Off Debt
Credit card and consumer debt can wreak havoc on your finances. So much so that many people fall behind because they simply can't make the payments. It's time to start slashing debt fast!
Taking the initiative to pay off your debt will result in greater financial health. It will free up money to spend and save in more places. Make a plan to pay off your debt as soon as you can.
4. Start Saving
Many Americans don't have enough money to cover even a $400 expense. This is why it's so important to have a savings account, so when you do have an unexpected expense, you are prepared and are not left high and dry.
Generally speaking, an emergency fund that is about $1,000 is sufficient enough for emergencies. Ideally, having 3-6 months of expenses saved is preferred in case of a job loss or if you need to leave your job for some time.
5. Cut Out Unnecessary Expenses
Are you spending an excessive amount of money on TV, phone plans, clothes, eating out, lattes, and more frivolous items?
When you're making a budget, see where you're spending your money and if there's anything you can cut out.
Before you cut out expenses, make sure you keep what is needed, like childcare, clothing, babysitting fees, and so forth.
6. Start A Retirement Fund
If you have not thought about starting a retirement fund, now is a perfect time.
While each person's retirement fund will be different, the average percentage to start saving is around 15%. If that seems impossible for you, start saving the smallest amount of money and gradually increase it as you can.
7. Talk About Money With Your Spouse or Partner
When people communicate openly with their spouse or partner about their finances, there's less stress in the relationship.
This will look different for each couple, but good places to start are paying bills together, doing weekly or monthly budge meetings, and anything else that's needed to maintain your financial health.
8. Find A Financial Advisor
Some people are very busy and simply don't have time to handle their money properly. If you truly have difficulty managing your finances, try finding a financial advisor.
Financial advisors can help you get your finances in order and assist you in reaching your goals. Be sure to research financial advisors first before deciding to work with one. Prepare a list of questions and things you want to discuss with your financial advisor so they know how to help you with your financial vision. They can help you prepare for the short term and long term with your money management.
9. Look Over Your Insurance
Having insurance is an important part of life. If anything catastrophic happens, most things are covered.
Looking over your insurance is wise for a couple of reasons.
First, so you make sure you're getting the best price for what you need. Many times people will overpay for insurance and are not sure what they're getting. If you think that you can get a less-expensive plan, do some price comparison.
Second, make sure you're getting adequate coverage. Paying for insurance that you don't need can cut into the budget.
10. Make Smart Investments Consistently
If you have the money to spare, you can start making smart investments.
Investing money can be tricky, especially if you've never done it before. If you're unsure about investing your money, or if it's a new avenue to you, talk with a financial advisor about what investments you can make with your money.
Are You Ready to Start Saving?
Having a better financial plan is key to having a less-stressful life. You can start by implementing the frugal steps above and paying careful attention to your spending. It may take some getting used to, but the financial results will be worth it.
Are you looking for more articles on financial planning and investing? Visit the Finance section of our website right now to learn about cutting costs and smarter money management!