Mapping Your Financial Future Doesn’t Have to Be Difficult
Imagine setting off on a road trip without a map, GPS, smartphone or even an address. Without a destination in mind, you wouldn’t get very far. Personal financial management is similar. If you don’t have a goal you are trying to reach, a plan for getting there and the proper tools, you won’t succeed. Fortunately, with some planning and help from your local Family Center’s personal financial managers or personal financial counselors, you can set yourself up for financial success.
Identify Your Financial Goals
One of the most important parts of personal finance is establishing goals. Everyone should identify financial goals, whether it’s to save for a down payment on a house, get out of credit card debt or go on vacation.
· You should have both short- and long-term financial goals. Short-term goals are generally things you hope to achieve in the next year, and long-term goals are anything beyond that.
· Make sure your goals are SMART — specific, measurable, achievable/attainable, realistic/rewarding and time-bound. This means that you should be able to write a detailed description of exactly what you hope to achieve, how long it’s going to take, and when you will succeed. An example of a SMART goal would be “I plan to purchase a used car by next December. I will save a total of $6,000 by setting aside $500 each month.”
Create a Plan
Having a plan for your money puts you in the driver’s seat. Once you know how much money is coming in and exactly where it’s going, you can set about achieving your financial goals. You should try to spend less than you earn.
· Track your spending. Go through your bank account details and receipts for the past three months. You’ll have fixed expenses, such as housing, insurance and loan payments, that get billed to you on a regular basis at about the same rate. You’ll also have variable expenses, such as food and entertainment. Make special note of those since they are all about choices. Total your expenses, then average how much you spent in each category.
· Add up your household income and subtract expenses.
· Take other financial goals into account. If you have a surplus, consider saving more or paying down debt. If you have a deficit, try to cut back on spending, especially discretionary spending, or consider bringing in more income.
· Now that you know exactly how much money is coming in, where it’s going and what you want in your financial future, create a spending plan, or budget.
· Stay in control of your finances by planning for your purchases and expenses. You can even save room in your plan for fun.
· Periodically re-evaluate your plan, especially if you have a lifestyle change such as a promotion, raise, marriage or birth of a child.
Make Saving Automatic
The best way to save is to put it on autopilot by setting up a monthly allotment from your pay to a savings account.
· Establish an emergency fund if you have not already done so. Even if you can afford to save only a few dollars per pay period, you should have a rainy day fund so you can avoid going into debt when the unexpected happens.
· Use the same principle of automatic contributions when it comes to saving for other things, like retirement or your children’s education.
Know When and Where to Get Help
Whether you’re just starting to put together a budget or are mid-career and trying to plan what to do with a bonus, the personal financial managers and personal financial counselors at your local Family Center can help you assess your goals and create a spending plan to help you achieve them. To locate services, visit https://installations.militaryonesource.mil, select “Program or service” on the drop-down menu, choose “Personal Financial Management Services” and enter your location. National Guard members can find support through their family assistance center, state family program director or unit leadership.
Free financial counseling is also available through Military OneSource. Learn more about developing a spending plan and sticking to it by joining the thousands of followers who are already keeping up with the experts at FINRED on Facebook, Twitter, Instagram and YouTube.
