15 Financial Planning Tips For Beginners

22 Apr 2020

Many people would like to establish a budget or financial plan or take a more active role in managing their investments. With an abundance of “expert” financial advice out there, though, newcomers to financial planning may well feel overwhelmed. To get started, it can be helpful to have one simple first step.

Below, 15 professionals from Forbes Finance Council share their suggestions for starting your journey toward more actively tracking and managing your personal finances.

Members of Forbes Finance Council share simple first steps to help you start actively managing your finances. PHOTOS COURTESY OF THE INDIVIDUAL MEMBERS.

1. Start with the end in mind.

The first step in designing a financial plan is spending time thinking about the end. You wake up each day to go to work and mostly to get through the day. Rarely does anyone spend time thinking about why they are working or what type of lifestyle is supported by their work. Aside from understanding your expenses and income, it’s important to have a vision of what you want in your life. - Tony Sablan, Ultimate Wealth Strategies, LLC

2. Know where your money goes.

Knowing where your money goes each day, each week and each month is a crucial foundation for a financial plan. This is one of the downsides to using cash—you can’t really track it. I encourage the use of a debit card or credit card so that all your expenses can be tracked, organized and used to build the proper groundwork for a new financial plan. - Will Duffy ChFC, RICP, EA, Accelerated Wealth

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

3. Determine your net income.

Prior to retirement, no matter your age, saving is nonnegotiable. When taking an inventory of your monthly income and expenses, make sure you are first looking at a net income amount. Your net income amount is what’s left after you have saved 15% of your gross income in multiple different types of accounts: taxable, tax-deferred and tax-free. These 15% savings should also be automatic. - Dawn Dahlby-Jurkovich, Relevé Financial Group

4. Know your fixed burn rate to the penny.

I always tell salespeople that if you have a cash flow problem, just make more money by making more sales. However, most individuals do not have the option to make more money. This means you should know what your monthly fixed costs are first. Then you can work your budget around your fixed cost. - JD Morris, Red Hook Capital

5. Use multiple bank accounts.

Using a single bank account can make budgeting and planning hard. Keep your budget to under five categories and set up different checking accounts for each category. This way it’s easy to see exactly how much money you have left in your budget without having to number-crunch each time—because let’s face it, that’s never going to happen. - Vlad Rusz, Centaur Digital Corp.

6. Make monthly deposits into an investment account.

Budgeting is hard and not always the most fun thing to do. So keep it simple: Just transfer money out of your account every paycheck into an investment account. Not a savings account, remember—an investment account. By investing for the future you are less likely to just transfer the money back into checking and spend it. - Michael Foguth, Foguth Financial Group

7. Reach out to your network.

Start with your network. Business professionals start out with relationships—leverage them! I have found some of my best templates and tools by just asking other businesses. Oftentimes, professionals are very willing to share templates and advice from when they first began. - Kelly Shores, GCubed, Inc.

8. Pay yourself first.

Set aside a percentage of every paycheck and put the money into a separate bank account as soon as you are paid. Most people get caught up paying their bills once their paycheck comes in and they end up with very little to save. By being disciplined and paying yourself first you will force yourself to live off less than your total paycheck. - Matthew Meehan, Shield Advisory Group

9. Check your credit score.

Once you’ve settled your nerves, run a credit score check. This is the first step in taking a financial inventory. Knowing where your credit score lies will help you determine what types of credit are available to you and at what interest rate. Plus, if your FICO score is in the moderate-to-high end (i.e., 650+), it may make sense for you to consolidate your debts under a single low-interest account. - Tyler Gallagher, Regal Assets

10. Use available resources and take micro-steps.

Your bank or credit card may offer complimentary financial planning resources, so check with them. Also, take small steps—like automating savings—to start (I use acorns.com). And here’s old but winning advice: Increase any retirement plan contributions you can make through work. It has a triple-whammy benefit of saving for yourself, receiving more from your employer through matching funds and reducing taxes. - Jackie Meyer, Meyer Tax, The Concierge CPA Coach

11. Understand your investment goal.

I would recommend starting by understanding your investment goal (regular income or long-term savings). It’s also important to understand the investment horizon. I would say that it has to be a minimum of two years—short-term speculative trades of “buy low and sell high” very rarely work because you cannot time the market and most likely will fall into behavioral finance traps. - Azamat Sultanov, Fortu Wealth

12. Document all your income sources.

I work with successful entrepreneurs and business executives who often realize income from several different sources. When you have a complex financial situation, it can be difficult to build a plan that accounts for everything. This is why I dig into the details first, documenting income, expenses and assets before building the plan. I recommend the same strategy to others facing complexity. - Brian Henderson, Whitnell

13. Organize your financial records.

As you begin the trek of building a financial plan for the first time, work very deliberately on all of the data collection. Use this opportunity to organize where you keep all of your financial information. This can include bank and investment statements, insurance policies, and updated spreadsheets of monthly expenses, as well as copies of estate documents. - Meredith Moore, Artisan Financial Strategies LLC

14. Leverage online budgeting tools.

Budgeting and financial-planning resources have come a long way from checkbook balancing and graph-paper budgets. With free and easy online tools such as Mint, Personal Capital and PocketSmith, you can sync all your bank, credit card and other accounts to one place, track expenses, create savings goals and build budgets. These tools make an overwhelming process very simple and easy to start. - Zack Cook, Rigor

15. Start spending less money.

Simple things like cooking meals at home, making your own coffee and only shopping on sale days add up when you are starting a new budget. Only splurge on things you really enjoy a few times each month. This builds the habit of spending within your means and you can begin to put more money away than you spend. - Jared Weitz, United Capital Source Inc.

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