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Financial Planning 101: 5 Simple Steps You Can Take Today!

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Are you wondering where to start when it comes to financial planning? Are you looking to establish or accelerate your savings? If so, these tips are just what you’re looking for.

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Before we had children and only a few years into our marriage, my husband and I took Dave Ramsey’s Financial Peace University course. It was great, and we learned a ton. If you have the money and the time, I would highly recommend taking this course. He also has amazing books that build on many of the topics covered there, but there is just something about having the weekly assignments to complete.

I am far from an expert here, but I have learned that becoming financially wise is a process, it is a learned technique that can be accomplished in a variety of ways. Here are just a few to get you started, but these are intended to be a springboard for how you can become more deliberate in how money is handled in your household.

Applying these basics is how we have been able to get out of debt before we turn 42

The envelope system

This was a great visual, especially for the one of us who is the spender.  The idea is basic.  An envelope for basic categories including groceries, gas, entertainment, medical, clothing, gifts, insurance, and savings among others a including what might be recurring expenses in your individual home.

Pay cash

Whether big things or little things, if there isn’t the cash to pay for whatever it is, then whatever it is doesn’t need to be bought.

Establish an emergency fund

This was huge for us. There are ways to get this in place quickly, he recommends $1,000, and I think that is a great number to start with, but the idea is to get it together as soon as you can. You never know when you will need this.

Working towards getting three to six months of expenses into a fully funded emergency fund is ideal. I can speak from personal experience, this is something you need to do. You never really do know where life will take you. We dipped into this fund for several months in a row during a time of financial transition including right now while my husband is in nursing school.

Create a budget

I will write more about creating a budget in a later post, but in a nutshell it begins with being extremely accurate about tracking what you are spending your money on. Then, honestly examine whether that spending is necessary or needs to be adjusted.

Start saving

Even if you think you have no money to save, and not for the emergency fund but for the future. Start with something. Chances are there is one thing you can start by cutting out.  This could be a coffee drink, a convenience snack, a meal out (just one that can be cut out a month?), or even dialing down or up your home heating or cooling system can give you a place to start. We cut out cable, feed our family of eight on $250 a month, and use the tips in 15 Essential Tips For Feeding a Large Family and 15 More Tips For Feeding a Large Family.

I have heard of some who just round up everything they buy to the nearest dollar and saves the change (since you are paying cash anyway). It is amazing how even the smallest savings begin to add up over time, and watching these savings begin to add up is very exciting.

I have also written about going on a spending freeze and shared money saving tips in 5 Ways Cutting Spending Can Bring You Wealth. I’ve even writing about 12 Reasons Your Spending Too Much over on Money Saving Mom.

These five tips are a great way that you can start with taking the reigns when it comes to financial planning

There are several other ways in which you can be financially savvy, but these are just a few big ways to get you started. If you have never been financially conscious before, even this list can seem overwhelming.

These are not changes that will take place overnight, and they don’t have to be tackled all at once. Pick one or two to take on initially, get some of these concepts in the works, and begin talking about them with the others in your house who will be involved and get them on board.

Especially if you are raising children, learning how to be financially wise yourself are invaluable lessons you can pass on to your children. Even my youngest kids have picked up on many of the things that I do.  For instance, my three year old will ask me “when is cereal going to be on sale again?” He knows that in our house, we don’t buy it if it’s not on sale. It is only something little, but it shapes the way his mind thinks about how money is handled in our house.

What simple changes can you make today?  What small changes have you made in your own life?  I’d love to hear in the comments!

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2 Comments

  1. I’m grateful for that rule to help determine what doesn’t need to be bought. That’ll be really helpful for me since I tend to overspend easily. I was talking to my friend about it, and she thinks it could be beneficial to meet with someone who has experience with financial planning to help get on top of things.

    1. Determining the difference between a want and a need is key! Sounds like you’re on the right track.

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