DIY Financial Plan
Hi babes! Here’s a comment from my inbox this past week “Sis I am overwhelmed! It is so much financial information out there. So many tips, so many recommendations, just so much. . . WHO DO I LISTEN TO?” I feel it! Too much information can paralyze you and result in you not making a decision at all, which is no bueno. That is why I always tell people DON’T GET OVERWHELMED. I was listening to a motivational speech, because I usually just listen to a compilation of motivational videos on YouTube (Gotta keep my mind right, right?). Anywho, Jim Rohn said be a student, not a follower. In this case, I interpreted that to mean to listen to the financial advice you are receiving, but truly reflect and ponder on it. Then implement what works best for you. There is not just one path to financial freedom. There are so many different paths and yours will not be the same as mine or anyone’s. You do not tirelessly have to copy someone who is successful or overly listen to a financial guru trying to implement every system he or she speak about, because even that do not guarantee results. Quite frankly, that is kind of setting yourself up for exhaustion and ultimately failure. However, the fundamental rules . . . the basic principles are the same regardless the path. So here are the basic principles in helping you create a financial plan that will steer you towards financial stability:
a. As I always say, mindset is everything. Believe you are capable and disciplined enough. As Ramit Sethi says “You do not have to be an expert to work on your personal finances”. You have the power to turn your money story around. Regardless how many times you might have started over, or dipped into that savings, or feel like your slowly chipping at your financial iceberg. KEEP ON GOING! Keep that “I got this” mentality. You really do got this.
2. Cash Flow
a. I am just going to be honest here, you need money. Stable and consistent money. Dave Ramsey said it best, “Your income is your greatest wealth building tool”. Review what you have coming in (your income) and what is going out (your expenses).
3. Budgeting and Goal Setting
a. Now you are aware of your cash flow. Review how you are spending your money? Are you happy with your spending habits? Ask yourself, “What do I financially want to accomplish?” Set goals on how you are going to get there. Make sure your goals are SMART (specific, measurable, attainable, realistic, and timely) goals. Now you have your goals written down, hone in on your budget. Your budget is your plan for your money so you can accomplish whatever goals you set for yourself. Your budget should be as you see fit! This is really where you are going to see if you can free up any money and direct it toward your goals. You may free up a fair amount, an okay amount, or none at all. If you are the latter, breathe, it is what it is. Sometimes the money just is not there. This is where sacrifices are going to have to be made. Maybe you have to drive for door dash or lyft or work overtime or pick up a side job/hustle to bring in extra cash to put toward your goals. Whatever you chose to do to bring in extra money is up to you. Remember all you can do is start where you are, do not be ashamed
4. An Emergency Fund
a. Please give yourself a buffer between you and financial surprises. Life happens and the happenings usually cost money. I recommend saving at least $1,000 dollars to give yourself that buffer. Don’t keep getting pushed back when something pop up. Build that buffer please. If you need help building an emergency fund, please read prior blog, “How to build an emergency fund”.
5. Debt Management
a. Not all debt is bad. It’s really high interest consumer debt, like credit cards and store cards that you should avoid & pay off. Do not over extend yourself. Know what you can afford. If you do use credit cards stay below the recommended 30 percent credit card utilization rate & pay the ENTIRE balance off each month.
6. Proper insurances in place
a. Having adequate insurance policies in place protect your finances. In laymen terms, health insurance, car and homeowner's or renter's insurance ensure when high, unexpected cost happens the happening will not drain your pocket. I also recommend long term disability insurance, which helps protect your future earnings. Lastly, but certainly not least, please consider life insurance, especially if you have dependents.
7. Save 3-6 months of expenses
a. Now you have everything on track and your finances are a little more stable, let’s fatten up that emergency fund. Save 3 – 6 months of your living expenses. You don't know what is going to happen. You may lose your job or get sick or whatever. Life throws curve balls sometimes, so be prepared.
a. Rather it’s for passive income or retirement (hopefully both), invest. Investing secures present and long term financial security. If you are not into cherry picking stocks, you can invest in mutual funds, index funds, or ETFs or all of them. For retirement you can contribute to a 401(k) or other employer-sponsored plan or invest in a traditional or Roth IRA.
9. Estate Planning
a. When you die, how do you want your assets divided among your living family. You probably instantly said, everything is going to my kids or spouse or whoever. Well, are you sure about that? At the minimum, have a will. According to Investopedia, "A will is a legal document that spells out your wishes regarding the care of your children, as well as distribution of your assets after your death. If you do not have a will then that leaves decisions about your estate in the hands of judges or state officials." GET A WILL
10. Build Wealth and Give
a. Whatever wealth looks like to you continue to build towards that. For me, wealth is securing long term income through multiple sources. I am constantly investing and looking towards procuring income generating assesst, such as properties & franchising a fast food chain. It is not just about you or me, its the legacy we are leaving behind for generations to come. I've made two promises to my son, never will he have to heal from me and never will he have to start at 0. Wealth looks different for everyone, partake in things that move you closer to your "wealthy life". Also, give. Your community cannot enhance if you do not invest back into it. Rather your investing your money or time. Give back to your community or give to projects that is dedicated to service. Remember, Reach one Teach one.
I consider these the basic principles in creating a financial plan. I am sure other people may differ. You may not be able to implement every principle listed just yet and that is perfectly fine. As I always say, start where you are and gradually work towards. You got this. Hopefully this helps you or at least help you feel less overwhelmed. If you have any questions, you can always shoot me an email at firstname.lastname@example.org or book a session through our financial coaching services. Follow me on snapchat @iamsisidevoe, like our Instagram page, and our https://www.instagram.com/projectrise18/ Facebook page,https://www.facebook.com/projectrise18