Money Management: A Planner
Life can be uncertain. Planning for future financial goals can help alleviate some of this uncertainty. You may be wondering what you need to do in order to cover future expected costs like retirement, a down payment for a home, a savings fund that can cover emergencies, and so on. Luckily, there are some steps that can be taken to get these plans in motion.
Step 1
The first step will be to figure out what your personal financial goals are. This may require some soul searching. Once you have decided that you want to start planning for your financial goals, you should get an idea of what that will take financially and time wise. Here are some general time frames to remember, which provide a good idea of how long it might take to reach your goals after you have figured them out:
- The 0- to 3-year time frame might include goals like creating a budget, establishing an emergency savings fund, building a good credit rating, saving for a vacation, or purchasing a vehicle.
- Items on your 3- to 10-year plan might include planning for a wedding, saving for a down payment on a home, or preparing for a birth of a child.
- Goals for 10 or more years from now could include retirement, providing for your child's college education, or end-of-life care.
Once you determine your goals for each timeframe, make a chart of the goal, how long it will take to achieve, and the amount of money you estimate you will need to achieve it.
Step 2
The second step will be to calculate your net worth so you have a good understanding of what resources you currently have that you can use toward your financial goals. Here is the formula:
Total Assets - Total Liabilities = Net Worth
Using a personal financial statement can help with assessing your assets and liabilities. If your liabilities exceed the value of your assets, it will result in a negative net worth. If this is the case, it may be a good idea to develop a plan that allows you to pay down some of your debts as a top priority.
Step 3
The third step will be to create a budget. This will help you understand your monthly income and expenses. Knowing your budget will be crucial when developing a plan to reach a financial goal. If there is a shortage in the budget, it will behoove you to resolve that before planning long-term. Here's a look at a sample budget template:
| Income (Monthly) | Current |
|---|---|
| Base Pay (Net) | $ ________.____ |
| Other Job Take-Home Pay | $ ________.____ |
| Other Income (Monthly) | $ ________.____ |
| Child Support/Alimony | $ ________.____ |
| Benefits | $ ________.____ |
| Rental Home Income | $ ________.____ |
| Retirement Pay | $ ________.____ |
| Social Security Benefits | $ ________.____ |
| Survivor Benefit Plan | $ ________.____ |
| Interest/Dividends | $ ________.____ |
| Other | $ ________.____ |
| Other | $ ________.____ |
| Total | $ ________.____ |
| Total of All Income | $ _______.____ |
| Expenses | Amount |
|---|---|
| Housing (Rent/Mortgage) | $ ________.____ |
| Housing Maintenance | $ ________.____ |
| Electric | $ ________.____ |
| Gas/Oil | $ ________.____ |
| Water/Sewer | $ ________.____ |
| Telephone (Home) | $ ________.____ |
| Telephone (Cellular) | $ ________.____ |
| Trash Pickup | $ ________.____ |
| Cable/Satellite/Internet | $ ________.____ |
| Automobile Payment | $ ________.____ |
| Auto Insurance | $ ________.____ |
| Life Insurance | $ ________.____ |
| Child Support/Alimony | $ ________.____ |
| Medical Insurance | $ ________.____ |
| Entertainment/Hobbies | $ ________.____ |
| Alcohol/Cigarettes | $ ________.____ |
| Barber/Beauty | $ ________.____ |
| Pet Costs | $ ________.____ |
| Property Tax (Monthly Figure) | $ ________.____ |
| Savings | $ ________.____ |
| Food Costs (Work and School) | $ ________.____ |
| Food (Groceries) | $ ________.____ |
| Clothing | $ ________.____ |
| Transportation (Gas, Bus, or Subway Fare) | $ ________.____ |
| Car Maintenance | $ ________.____ |
| Personal Needs | $ ________.____ |
| Child Care | $ ________.____ |
| One Time/Annual Expenses | $ ________.____ |
| Other Health Costs | $ ________.____ |
| Other | $ ________.____ |
| Other | $ ________.____ |
| Other | $ ________.____ |
| Debt Payments (Credit Cards, Loans, etc.) | $ ________.____ |
| Total Expenses | $ _______.____ |
| Total | |
|---|---|
| Total Income | $ ________.____ |
| Total Expenses | $ ________.____ |
| Surplus/Deficit (Difference + or -) | $ _______.____ |
Step 4
The fourth and final step will be to start saving for your goals by understanding what it will take annually and monthly to reach those goals. If you created a monthly budget, you can now add the monthly saving amounts you will need in order to meet your goals. Be sure that this does not create a shortage in the budget, however. If it does, you may need to reconsider your goals or make some cuts in your current monthly living expenses to get rid of that shortage.
Workplace Options. (Revised 2020). Money management: A planner (A. Moyer, Ed.). Raleigh, NC: Author.