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Financial Planning for Peace of Mind

Financial Planning for Peace of Mind

The Problem

Do you feel as if you lose money faster than you make it? Do you spend money on pretty much whatever you want but your savings account is...well, nonexistent? Are you a bit anxious about your financial stability now, and in the years to come? Do you simply appreciate living an organized life, but just can’t seem to organize your finances?

If your answer is no to all the above questions, congratulations! You probably accidentally stumbled on this blog. But. if your answer is yes to one or more of the above questions, you are not alone. According to the American Psychological Association, in October of 2020, 2 in every 3 adults said money contributes a whole lot to their stress. 

Yes, loads of people have money troubles. So because it’s normal, you can just sit back and relax. It will all sort itself out right? Wrong.  

Do something about it

You need to get in that driver seat and take control! You can start that transition from passenger to driver today. How? Don’t stop reading.

For some, saying “financial plan” sounds complicated and formal. While organization is necessary, a financial plan neither has to be complicated nor formal. It’s just your finances you need to organize, not the federal budget. 

And no, you don’t need to first start making a pretty penny to have a financial plan. So what exactly is a personal financial plan? 

In its simplest form, a personal financial plan is an overview of what your financial situation is now, what your financial goals are, and what realistic steps you can take to reach those goals. It can include both short-term and long-term goals.  

Where do you start?

The devil is indeed in the details. You will absolutely need to make time to create a functional financial plan. So let's get the ball rolling.

You can start by: 

1. Deciding where you will have your financial plan.

Are you old school like many? To you nothing beats good old pen and paper? If so, your first step is getting a notebook that will only be used for making your financial plan. If you’re more of an electronic storage type of gal (or guy), create a financial plan folder. Regardless of what you prefer, be sure that your financial plan is safe, and easy for you to access.

2. Describing what your current financial situation

Start by making a list of your monthly income and expenses. Then examine what expenses might be unnecessary. Let’s say you spend $12-$15 on two to three meals daily. That’s approximately $720-$1,350 per month. Are there ways you can cut back?

The more you understand your financial situation now, the easier it will be for you to understand your needs.

3. Writing down one short-term goal, and one long-term goal

For each, write the first thing that comes to mind. 

4. Mindset and Lifestyle changes.

Consider what mindset and lifestyle changes you can make so that you can start to create new, positive habits meet your goals.

These suggestions are super simple, and may even seem insignificant.  The point is starting the process in one way or another. So if you don’t have much time on your hands, baby steps like the above will be key to getting your financial plan underway. Sometimes we really do need to crawl before we walk, and there is no shame in that. Slow and steady wins the race. 

Other things you need to remember!

Rule your mind or it will rule you.

Self control will be super essential for you to follow through with your financial plan. We are creatures of habit. It is difficult to change even when change is necessary. Habits are hard to break. Self control is key and will help you make changes. 

Like James Clear said in his book (Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones), “Breakthrough moments are often the result of many previous actions, which build up to potential required to unleash a major change.” So don’t forget that small changes build up over time. Challenge yourself. 

Perhaps you can reduce how much you spend on eating out by cooking more. Or, start by setting a small savings goal. Once you hit it, set a new goal. Rinse, repeat and watch your savings grow.

Don’t let your money disappear without a trace.

At the end of the day, write down what you spent money on. At the end of every week compare the money you’ve spent, to the money you’ve earned. Take note of where you can cut costs.

To help with tracking, you can use your financial plan notebook (mentioned above) or create a simple spreadsheet. Google Sheets has a pretty neat template you can use to enter your income and expenses. Or, you may prefer using an app like Mint, You Need A Budget (YNAB) or Spending Tracker, to name a few.

“The wise man sees the danger and conceals himself.”

An emergency is always a possibility. One of the best financial planning advice is to start an emergency fund, and keep it separate from your savings. The more money you can have for emergencies the better. However, no matter what your financial situation is, aim to have an emergency fund that covers at least three months of your necessary expenses. 

You actually CAN make a dollar out of 15 cents.

Learn about smart investment options. Investing is almost always a learning curve, so start small. Your first small investment can be purchasing a book that teaches you about investing.   

Did you hear about the traveler that lost his compass? 

Much like a compass, our goals point us in the direction we need to go. So set goals for yourself. If you can’t think of any long-term goals, a basic financial plan will help you to at least meet your short term goals. These goals may include simple things like paying your credit card bill on time, and cutting costs where you can.  

The bottom line

Mind over matter! No matter what your lot in life is, degree or no degree, you have the final say in what you can and cannot do. Even if you don’t have any set goals in mind. Make a simple financial plan as a start. The World Wide Web is your friend. You can search for outlines and templates online. 

As meeting your basic necessities becomes easier, you will be ready to set a long term goal. When that time comes don’t be afraid, dare to dream and make baby steps to get there!