According to a recent study by Capital One, 77% of Americans feel stressed regarding their financial situations. Stress closely correlates with physical and mental, giving more significant importance to taking care of finances as, by taking care of them, you may experience positive effects. By taking care of your finances, you will also be more prepared for the unexpected twists and turns of life.
Whether you are trying to make a financial plan for your situation or your business, financial planning may seem difficult at first. An optimal financial plan looks at current assets, savings and debts that then create goals to usher you forward, no matter your financial standing or salary.
Make a Budget
Every financial plan begins with making a budget. Budgets help you keep track of incoming money, expenses and spending. Having a budget is particularly useful when money seems tight or too easily spent. We recommend calculating your base income per month and immediately deducting twenty-five percent to establish a net income. Then, build a budget based on essentials, with one essential being yourself. Budget 10% for yourself and then divide the rest among food, bills and other essentials.
Set a Financial Goal
Identify your financial goals and priorities, and budget your finances to align with your goals and priorities. Make a “must-have” plan, and then add a “nice-to-have” category. This plan will serve as a guideline for where to spend money and when and where to cut spending if necessary. By having a goal, you have something to work towards, building motivation and perseverance.
It is never too late to start saving. Even with a modest salary, it is still possible to save and those savings go a long way. With as little as $5 per week, you and your family can plan for your future and develop amazing financial habits. Every cent you put aside may be helpful in the event of unexpected expenses or may allow you an early retirement. Some saving plans provide tax deductions, which you can learn more about from our experts at Care Financial.
Set Aside Emergency Funds
An emergency fund is money set aside in case an unexpected event occurs. These funds reduce financial anxiety and prevent you from going into debt in the event of an unpredicted expense. The amount in an emergency fund may vary, but we typically recommend that an emergency fund consists of three to six months of one’s salary. This may seem like a lot, but emergency funds take several years to build up. The most important thing for you to remember is to start saving with realistic amounts based on your budget slowly.
Review Your Spending Habits
One of the best ways to form your budget is by carefully reviewing your spending habits. Are those new pair of shoes and that extra shot of espresso worth it? Stay patient with short-term changes because these changes will leave a long-term difference in your pocketbook. With the power of compounding and self-control, you’ll save money everywhere you go and be better prepared if you fall on hard times.
When you create a financial plan, you save yourself money and stress. If you need help, our experts at Care Financial can help you prepare for rainy days and retirement. Call us or visit us today to speak to one of our financial advisors and we will happily assist you will all of your finances!