10 financial planning tips for beginners

BY THE PERK LENDING TEAM | September 12, 2023 | 2-minute read

Financial planning creates a blueprint that helps you reach your financial goals. Planning consists of four main elements: a budget, a savings goal, a debt repayment plan, and an investment strategy. Below are beginner tips to consider when developing a plan.

Set clear goals

Define your short-term and long-term financial goals. Whether it's saving for a vacation, buying a home, or retirement, having specific goals will give your financial planning a purpose.

Create a budget

Track your income and expenses to understand where your money is going. This will help you identify areas where you can cut back and save more.

Create an emergency fund

Start building an emergency fund to cover unexpected expenses like medical bills or job loss. Aim for 3-6 months' worth of living expenses.

Pay off high-interest debt

Prioritize paying off high-interest debts like credit cards. The interest on these debts can quickly add up and hinder your financial progress.

Save and invest

Allocate a portion of your income to savings and investments. Consider opening a savings account for short-term goals and exploring investment options like retirement accounts and low-cost index funds for long-term growth.

Automate savings

Set up automatic transfers to your savings and investment accounts. This ensures that you consistently save without having to think about it.

Diversify investments

Don't put all your eggs in one basket. Diversify your investments to spread risk and potentially increase returns.

Plan for big purchases

Start saving for retirement early, even if it's a small amount. Compound interest can significantly grow your retirement savings over time.

Insurance coverage

Ensure you have appropriate insurance coverage, including health, auto, home/renter's, and possibly life insurance, to protect yourself and your assets from unexpected events.

Seek professional advice

If you're unsure about certain financial decisions or need more complex planning, consider consulting with a certified financial planner (CFP) or a financial advisor.

Remember, financial planning is a gradual process. It's important to be patient with yourself and stay committed to your goals. Starting early and being consistent with your efforts can have a significant positive impact on your financial future.

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