3 Keys to Creating a Personal Finance Strategy

It’s good to have a plan. Contractors follow a building plan, medical students follow a strict academic schedule, and wedding planners think through every last detail of their clients’ big day.

This principle rings just as true for personal finance—a plan puts your money to work and helps you create the future you’ve always envisioned. These three keys will assist you in creating a financial plan that fits your needs and helps you reach your goals.

1. Assess your current financial situation.

Before you can plan for the future, you need to evaluate where you stand today. More than likely, you’re not quite where you want to be in certain financial areas—however, an honest assessment is the first step toward making positive changes.

Once you have a clear picture of where you are financially, you can make choices that get you where you’d like to be. Instead of investing, saving, or paying off debt without a strategy, you can find a way to maximize those efforts over time.

2. Set clear financial goals.

Instead of thinking about having a certain amount of money as your end goal, consider what you want your money to do for you. This allows you to create an intentional strategy for retirement, purchasing a home, paying for your child’s college education, or becoming debt-free.

Consider both long-term and short-term goals in your plan. For example, saving for retirement is a decades-long strategy for almost everyone. Meanwhile, you may want to eliminate credit card debt in a year or two, save for an international vacation, or build up enough for a down payment in five years. You can absolutely work toward multiple goals at once!

3. Create an actionable plan.

Now that you have an accurate picture of your situation and a list of financial goals you’d like to accomplish in the years ahead, you can build a step-by-step plan for a brighter future for yourself and your loved ones.

Your plan should be specific and prioritized by the goals you want to accomplish first.  Successful personal finance plan includes at least four action items.

     I.         Stick to a budget.

Budgeting may not be the most exciting part of financial planning, but it’s an essential part of the process. There are many ways to budget, but each has the same goal: to help you spend less than you earn, which provides the bandwidth you need to save and invest.

Your budget can be tailored to your needs, but if you need a place to begin, consider these common line items:

  • Rent or mortgage payments
  • Utilities and monthly bills
  • Groceries and dining
  • Subscriptions and memberships
  • Gas and vehicle expenses
  • Shopping and entertainment
  • Debt repayments

   II.         Build your savings.

When it comes to saving, many people think about the golden years of retirement – but there are other important ways to save that can benefit you long before you stop working. A great savings plan has a multi-pronged approach.

  • Long-term savings, like IRA or 401(k) contributions, can be automated so you’re effortlessly contributing to your future year after year.
  • Medium-term savings, like contributing to your child’s 529 plan or saving for a down payment, can become line items in your budget until you reach your goal.
  • Short-term savings, like emergency funds, may not need your active contribution every month, but it’s important to build this account to protect you from those unexpected costs that pop up for everyone from time to time. Once you reach your desired balance, you can pivot to a new strategy (until it’s time to replenish).

 III.         Start investing.

It’s never too soon – or too late! – to begin investing. Investments are one of the primary ways individuals build wealth and put their dollars to work for them. Even if you only have a small amount to designate toward an investment portfolio each month, it’s a worthwhile endeavor.

Knowing when, where, and how much to invest can be overwhelming. A trusted investment management professional can help you navigate the complexities of the market and create a strategy that works with your goals and risk tolerance.

 IV.         Prepare for the future.

If you haven’t taken the time to calculate when you’re ready to retire, there’s no day like today. Determining your retirement plan is a huge part of your overall saving and investment strategy. Retirement planning is just one way to prepare for the years ahead. You may want to consider creating an estate plan, writing a will, or establishing a trust  to set your loved ones up for a secure financial future after you’re gone.

A Partner in Personal Finance

If you’re looking for a trusted partner to help you navigate your personal finances, Marietta Wealth is here to help. As a fiduciary to our clients, we’re dedicated to putting your needs first in financial planning, retirement planning, and investment management.

Give us a call today and learn how we can become your personal finance partner for life.

Marietta Wealth is a registered investment adviser.  Registration of an investment adviser does not imply any level of skill or training.  For additional information about Marietta Wealth’s financial planning and advisory services, please see the Marietta Wealth Disclosure Brochure or ADV Part 2A for full details, which is available upon request or by visiting our website. 

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