Six Dollar Family

Six Dollar Family

  • Home
  • About
  • Thrifty & Frugal Living
    • Personal Finance Tips
  • DIY & Crafts
  • Family Recipes
  • Homesteading
    • Green Living Tips
  • Learn to Blog
  • All Posts
You are here: Home » Personal Finance Tips » Budgeting » The Basics of Financial Planning: 5 Steps to Success

December 27, 2020 By Stacy Williams

The Basics of Financial Planning: 5 Steps to Success

Filed Under: Personal BudgetTagged With: Ways to Budget

This post may contain affiliate or referral links that help keep this site running. For more information about this, please see our Disclosure Policy. As an associate of Amazon.com/Amazon.uk/Amazon.ca/and other websites, I may earn a small commission whenever you click through a link from this site. This commission helps to support this site and keep it running. Six Dollar Family is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com/Amazon.uk/Amazon.ca.




Financial planning is a major topic, so it can be helpful to break it down into the initial basics to get started. This way, it doesn’t become too overwhelming, wherever you are financially in life. Here are 5 steps to success with financial planning.

Trying to get your personal budget straight for the new year? Watch out for the Joneses! Use these tips to avoid financial jealousy and those pesky Joneses.
  1. Create a Budget (Six Dollar Family) Based on Your Goals

Little is achieved with personal finances unless a budget (Six Dollar Family) is created. More than this though, using a zero-based budget that “gives every dollar a name” gets more specific by planning out the financial month before it gets there. Then, you can plan your spending around your goals.

By using this methodology, it’s possible to plan for how much you’ll save and invest each month. Initially, it will be small amounts and likely go towards short-term saving or debt repayment, but later these excess funds can be devoted to investing in order to grow your net worth over time. 

  1. Reduce Expenses to Increase What You Can Invest

While increasing your salary by progressing up the career ladder is a useful thing, it’s not as readily under your control. However, what you can grapple with and control is what you spend. Monitoring and reducing your expenses is necessary to maximise how much is possible to set aside towards wealth building.

  1. Reduce or Eliminate Debt

Debt is an indication of living beyond your means. When living this way, it’s impossible to get ahead financially. Delayed gratification is necessary to reduce spending on frivolous items which otherwise limits what you can save and invest each month. 

Once the overspending (Six Dollar Family) has ceased, address the debt by reducing it and eventually eliminating it. Start with the smallest debt first to build up momentum. Study and use the debt snowball to increase how effective you become at debt elimination.

  1. Create Backup Savings in Case of Emergency

Building up savings in case of an emergency is a sensible idea. It doesn’t matter whether it’s a boiler going wrong unexpectedly, a painful tooth that needs extracting urgently, or something else. Surprises occur in life all the time and often they cost money to resolve.

By saving up an emergency fund, you can cover the outliers that will otherwise derail you. Also, begin to set aside money for repairs and replacement costs too. Things like home maintenance, car repairs, and replacement IT and mobile device costs come to mind. 

  1. Invest Well and Often

Once you have sufficient savings in place, it’s time to put some of it to work for you. You can get involved with stock market trading dealing with CFDs and other options. Certainly, this can be a part of your overall investment portfolio. But you also want to leave space for fixed income and equities. This provides a more balanced approach to avoid the major seesaws of volatile prices which could put you off continuing to be an investor long-term.

Invest regularly to build up your various investing accounts to take advantage of opportunities when you discover them, whether that’s a temporarily out-of-favour sector of the market, a bargain stock, or something else entirely.

With some good financial planning, it’s possible to substantially improve your financial standing and create a compelling future outlook too. Failing to do so is likely to lead to the opposite outcome.


Previous Post: « How to Make a DIY Cereal Box Organizer

Reader Interactions

I would love to hear your thoughts! Leave me a comment! Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

Looking for Something?

Bio of Stacy Williams, blogger and authorI’m Stacy - 1/4 of the Six Dollar Family. I'm on a journey to become a six figure family and I would love if you came along with me! We'll kick off our shoes, sip sweet tea, eat loads of goodies, save some money and maybe even learn a thing or two along the way! Six Dollar Family Bio

Order your copy of the Six Dollar Family Book

Footer

From Six Dollars to Six Figures

  • Facebook
  • Instagram
  • Pinterest
  • Twitter
  • YouTube
© 2011-2020 Six Dollar Media | All Rights Reserved. | Disclosure Policy | Privacy Policy
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.AcceptRead More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.