The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Whether you already have children or are in the planning stages, you will need a financial plan in place to protect yourself from the bumps of life. While you can’t be ready for absolutely everything, the confidence and security of knowing that you have investments, savings, and a strong credit rating can make the future look a bit brighter.
1) Tracking
Before you can decide what to do with your dollars, you need to figure out where they’re going. There are a lot of apps on the market, but sometimes the easiest method is to put pen to paper and write down what you spend. This will be easier if you can withdraw cash to cover what you need to buy for a week and put receipts where the cash used to be. Next, review your receipts and note which expenses were worth the time you spent making the money, and which were not. Spending with cash can make money real in your mind and make it much easier to shop smart.
Hopefully, when you know where your money is going, you’ll have some left every month. Like a lot of improvements in life, your personal savings plan will grow in small steps. It may be impossible to stash away half of your paycheck every month, but can you put 10% in emergency savings? Investments are important, but a portion of your cash will need to stay liquid so you can handle any crises that crop up. If you have not set up a savings account, open one at your local bank or credit union. For example, if you live in Nebraska find a place that offers a personal savings plan in La Vista, NE.
3) Goals
As money starts to build in your accounts, discuss your financial goals with your partner. Do you want to own a home, or start a business? Both of these are capital intensive projects, so take care not to stretch your dollars, yourselves or your relationship too thin. Once you agree on your financial targets, go back to your budget and see where you can trim to set up a savings account for your goal.
While you’re reviewing your goal, remember that there are programs in place to help you along. For example, if you want to buy a home, there are options beyond waiting to save up to cover that down payment. You can
apply for grants to cover your down payment
seek out forgivable loans to pay the down payment
find a mortgage that doesn’t require a down payment
If your credit is good, you may be able to get pre-approved and get guidance from a local banker or a mortgage broker on programs to help in your area. Explore all options to help you get to your goals more quickly.
If your employer offers a 401(k) program or similar, make sure you contribute whatever you need to contribute to receive the full match from your employer. This match is a bonus that you can receive every month just be contributing enough to your retirement funds, so don’t miss out.
Your employer will likely have a selection of investments that you can choose from to build wealth. Sit down with your spouse and discuss your risk tolerance. Market volatility can make some people excited and drive other folks crazy. If watching the balances spike and drop gives you indigestion,
don’t check your balance more than once a month, and
invest in funds that grow slowly over time
Discuss your collective risk tolerance with a financial planner to make sure that both you and your spouse are comfortable with the volatility risk of any investment funds.
5) Credit
Properly handled, credit can help you build a solid financial future. Improperly handled, it can spell disaster. If you’re not great with credit cards, start small. Get a card with a small limit, preferably one that offers points. Before you head out to buy what you need, rather than what you want, check the balance in your checking account. Shop, spending what you can afford according to the bank balance. Then go home and pay off the card. This action will keep money real and may boost your credit rating.
Being financially compatible with your partner is one of the greatest forms of collaboration in a relationship. If everyone is working to save for a goal, saving is fun and frugality is a family affair.
