Strategic Financial Planning is used a lot with businesses, but the idea can be applied to the way we manage our finances. Strategic financial planning is a plan that helps a company/individual determine what steps to take to be competitive for not just the short term but for the future as well. One of the issues that we have as young professionals is that we make decisions but don’t necessarily create a plan for adapting if things go wrong.
For example, most of us decided we want to go to college. When we learned that financial aid like grants and scholarships wouldn’t be able to cover the full cost of tuition, we took out other student loans. After we took out the loans most of us didn’t plan for how we would be able to pay the student loan companies back. Then after graduating we ended up pursuing life goals while the debt collectors ring our doorbells and hold us hostage.
When I first learned about strategic financial planning, I learned how important it is for all of us to invest in it. It is important! So, what are some examples?
- Develop a budget and stick to it.
- Start saving for retirement early
- Invest in yourself
- Be mindful of your credit score
- Have an emergency fund
- Stay away from high-interest debt
- Invest in a side hustle
- Make a plan
- Set aside money each month
- Make a list of your financial goals
- Automate your finances
- Create a spending plan
- Avoid impulse buying
- Make a list of annual expenses
- Use a budgeting/expense tracking app
- Negotiate your salary
- Invest in stocks
- Pay off your debt
- Get Life insurance
- Live below your means
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Personal Strategic Financial Planning Examples
1.Develop a budget and stick to it.
Creating and following a budget is one of the most important aspects of effective personal strategic financial planning. When you know how much money you have to work with each month, you can make better decisions about what expenses are necessary and which ones can be cut. The first step in creating a budget is to determine your income and expenses. This includes both your fixed and variable expenses. Fixed expenses are those that stay the same each month, such as rent or mortgage payments, car payments, and insurance premiums. Variable expenses are those that vary from month to month, such as groceries, utility bills, and gasoline costs. Once we determine our income and expenses, we can create a plan. I recommend this budgeting workbook “The One Week Budget” by Tiffany Aliche, also known as, The Budgetnista!
2. Start saving for retirement early.
One of the biggest mistakes people make when it comes to their finances is not saving for retirement early enough. The sooner we start saving, the more time our money has to grow. Two ways that we can start saving for retirement is to figure out how much money we will need to live comfortably when we get to the desired retirement age. This amount will vary depending on your lifestyle, but a good rule of thumb is to have 85% of your current income saved. Another way to start saving for retirement is to automate our retirement savings. This will help us to make saving for retirement a habit. Have a fixed percentage of our income automatically transferred to our retirement account every month.
3. Invest in yourself.
One of the smartest investments we can make is investing in ourselves. Taking courses and learning new skills will help us be more competitive in the job market and could help us negotiate a higher pay. Some people might say that Investing in yourself is a waste of time, but those people are usually the ones who haven’t Invested in themselves. Once we start Investing in ourselves, we should start seeing the benefits immediately. We’ll be more confident. Self-investment comes in many forms. It can be Investing our time in learning new things or investing our money in our business ideas or future. Whatever form it takes, investing in ourselves is one of the smartest things we can do.
4. Be mindful of your credit score.
Your credit score is one of the most important factors when it comes to getting approved for any type of loan like for your car or a house. Make sure you keep track of your credit score and work to improve it if necessary. Maintaining a good credit score is important for securing loans with lower interest rates and better deals on credit cards. Here are a few ways to be mindful of your credit score. First, know your credit score! You can get a free copy of your credit report from AnnualCreditReport.com.
Next, don’t open too many loan accounts at once. Credit inquiries are a factor in your credit score, so applying for multiple credit cards or loans resulting in opening too many accounts at once can ding your score. Finally, check for errors on your credit report. Errors on your credit report can hurt your score, so it’s important to dispute any errors you find. Again, I recommend this credit improvement workbook by Tiffany Aliche, also known as, The Budgetnista!
5. Have an emergency fund.
It’s always a good idea to have an emergency fund saved up in case something unexpected happens. This will help you avoid going into debt if you need to cover a sudden expense. Having an emergency fund is one of the most important things you can do to protect yourself financially. To start an emergency fund, estimate your monthly living expenses. Then, multiply that number by three to get a rough idea of how much you should aim to have in your emergency fund at any given time.
Once you know how much you need to save, open a dedicated savings account for your emergency fund. Digit is a great app that takes the guesswork out of saving money. You can create different savings goals and set minimum amounts that Digit will automatically withdraw from your bank account and save for you. You can tell the app to save money for a rainy day, a special trip or even to pay down credit card debt. Click here to download the app and we both get $5 toward our savings!
6. Stay away from high-interest debt.
One of the worst things you can do for your financial future incur high-interest debt. Make it a priority to pay off any debts you have with high interest rates as soon as possible. To stay away from high interest debt, create a budget and make sure you’re only spending what you can afford. Also make sure to pay off your credit card debt as quickly as possible, with rising interest rates the minimum payments will rise. If you’re having a hard time paying off debt, please reach out to a financial adviser.
7. Invest in a side hustle.
Having a side hustle/job is a great way to make extra money and it can also help you reach your financial goals faster. If you’re not sure where to start, there are plenty of online resources that can help you find the right opportunity. When it comes to earning more money, a side hustle is a great way to do it. By investing in a side hustle, you can bring in extra income that can help you cover expenses, save for the future, or simply get ahead. However please do your research and understand the risks involved.
8. Plan.
Personal strategic financial planning is all about making a plan and sticking to it. Decide what your goals are and then create a step-by-step plan for how you’re going to achieve them. Planning is an important step in achieving our goals. By taking the time to develop a plan, we can ensure that we are organized and have a clear roadmap to follow.
9. Set aside money each month.
One of the best ways to reach your financial goals is to set aside money each month to put towards them. This can be done by setting up a budget and automatically transferring a certain amount of money into a savings account each month. One way to set aside money each month is to automate our finances. We can do this by setting up a budget and automatic transfers to our savings account or other money saving app, so we don’t have to think about it.
Again, Digit is a great app that takes the guesswork out of saving money. You can create different savings goals and set minimum amounts that Digit will automatically withdraw from your bank account and save for you. You can tell the app to save money for a rainy day, a special trip or even to pay down credit card debt. Click here to download the app and we both get $5 toward our savings! Again, I recommend this savings workbook by Tiffany Aliche, also known as, The Budgetnista!
10. Make a list of your financial goals.
Before you can start working towards your financial goals, you need to know what they are. Sit down and make a list of everything you’d like to achieve financially. This could include things like buying a house or saving for retirement. Making a list of your financial goals is a great way to get started on your journey to financial success. By writing down your goals, you can make them more concrete and tangible, which can help you stay motivated and on track. When we are making a list of our financial goals, we must make sure that it’s realistic and specific. When our goals are too broad it makes it hard to accomplish them.
11. Automate your finances.
One of the best ways to make sure we’re sticking to your budget is to automate our finances. This means setting up automatic payments for things like rent, utilities, and groceries. This way, we’ll never have to worry about forgetting to pay a bill or being late on a payment. We can also set up automatic transfers to savings accounts or investment accounts. By automating our finances, we can reach our financial goals faster.
12. Create a spending plan.
If you’re having trouble sticking to your budget, it might help to create a spending plan. This will help you track where your money is going each month and identify any areas where you might be overspending. We can create a spending plan by calculating our fixed expenses. These are the bills we must pay each month, such as rent, utilities, car payments, and insurance. Also, we need to track our variable expenses. These are the day-to-day costs that can fluctuate, such as food, transportation, and entertainment. Once we have our expenses identified we can now create a spending plan. Remember when we create a plan we need to be disciplined and stick to our plan.
13. Avoid impulse buying.
Another example of personal strategic financial planning is to avoid impulse buying. If we see something we want, we should wait a few days and see if we still want it after you’ve had some time to think about it. Remember if we are on a budget we need to stick to our plan! Impulsive buying is a very costly habit, but it’s one that can be avoided. If you’re not on a budget and you need to purchase something, plan and set aside money for it. This can help avoid impulse buying and will also save money in the long run.
14. Make a list of annual expenses.
Another great way to get started on creating a budget is by making a list of your annual expenses. This will give you an idea of how much money you need to save each year for things like Christmas, vacations, and car repairs. Personal strategic financial planning involves knowing your annual expenses. This isn’t always easy due to prices changing over time, but the goal is to get as close to the expense as possible.
15. Use a budgeting/expense tracking app.
If you find it difficult to keep track of your finances manually, there are plenty of budgeting and expense tracking apps available that can help. These apps will track your spending and help you stay on budget. There are lots of different budgeting apps out there, so it’s important to choose one that fits your needs. Some tips on how to find an app that’s right for you is to find an app that fits your lifestyle and needs, choose an app that is easy to use. You want an app that’s easy to navigate and understand. Some apps are free to use and some charge a fee to use them.
16. Negotiate your salary.
One of the best ways to improve your financial situation is to negotiate your salary. If you’re not happy with what you’re making, don’t be afraid to ask for a raise. When it comes to your career, salary negotiation is key. It can be the difference between making a good living and just scraping by. In order for you to get the best possible salary offer, you need to know how to negotiate. One great tip is to know what the average salary is for your position in your area. This will give you a good starting point when negotiating.
17. Invest in stocks.
If we have some money saved up, investing in stocks can be a great way to make it grow. Investing in stocks can grow our money, but it’s important to remember that there is always risk involved. Before we invest in stocks, it’s important to understand the risks and have a plan in place for how we will react if the stock market takes a turn in an unfavorable direction. Make sure you do your research before investing in any stocks and always talk to a financial/investment advisor if you have any questions.
18. Pay off your debt.
Paying off your debt is one of the most important things you can do for your financial future. Make it a priority to pay off any debts you have with high interest rates as soon as possible. To get started paying down our debt we need to determine how much debt we have and what our monthly payments are. There are tools like Personal Capital to help keep track of our debt and net worth.
After determining our debt, we can then break down our debt into categories to see what kind of debt we have. There are two main types of debt: secured and unsecured. Secured debt is backed by collateral, like a home or car. Unsecured debt is not backed by any collateral and includes credit card debt, medical bills, and student loans. When we have identified what kinds of debt, we have we can create a plan on how to pay the debt off.
19. Get Life insurance
Our Personal Strategic Financial Planning should include getting life insurance. If our family relies on our income, or we have significant debts that we would like to pay off in the event of our death this should be an investment we should be willing to take into consideration. If you aren’t sure what coverage is right for you and your family, please speak with a licensed life insurance agent. Check out my blogs about life insurance!
20. Live below your means.
One of the best ways to save money and reach our financial goals is to live below our means. This means spending less than we earn each month and saving the difference. Living below our means is knowing what our actual monthly expenses are. This includes fixed expenses, such as our mortgage or rent, car payments, and insurance premiums, as well as variable expenses, like groceries and utilities.
Once we know how much we’re spending each month, we can start to create a budget and adjust our spending accordingly. Another key to living below our means is to avoid lifestyle inflation. This means resisting putting pen to paper (or finger to keyboard) to sign up for things we don’t need and begin tracking every single penny we spend in a month. This may seem like a tedious task, but it’s the only way to get an accurate picture of where our money is going.
Conclusion
That’s it! These are 20 personal strategic financial planning tips to help you get your finances in order. As you can see, most of these tips are common sense, but that doesn’t mean they’re easy to follow! If you find yourself struggling with any of these steps, don’t worry – you’re not alone and you will find the information needed to help. Remember this is a marathon and not a race! Please feel free to share your own tips in the comments section below and let us know what you struggled with the most. Thanks for reading! Until next time!
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