FINANCIAL PLANNING
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Financial Planning Strategies in Tough Times

The following strategies can help strengthen your money management skills. All are designed to give you an edge during the tough times. 
 

Evaluate your spending habits

Are they helping or hindering your financial stability? Can you really afford that SUV? Or season’s tickets to the symphony? Do you need a financial planner to help you reduce debt? It might be helpful if you get a financial planning consultant. 

Start first by analyzing spending and savings habits. Here are questions that you may want to ask yourself:

Do your debt payments, including your mortgage, exceed 35% of your gross monthly pay? If so, you have too much debt. Your mortgage should not exceed 35% of your gross income. (That includes property taxes and insurance.) Add that payment to other debt - your credit cards, car loan, etc. and you may be approaching a dangerous debt threshold.

Do you justify impulse purchases? You’ve had a tough week, so you buy things to feel better. Or you tell yourself; “I don’t go on vacation much, so I’ll just buy these Italian shoes!” If this sounds familiar, try a “Stop Spending Week.” Eliminate restaurant meals and unplanned purchases. You’ll be surprised at the results. 

Do you shop around for the best deal? You could lower your expenses by shopping around for discount. Shopping around could save on a lot of expenses.

Dealing with the immediate bills. You should make regular payments and not add to current debt. 

Time to crack down: Don't add any more debt and continue paying down current debt. You should try the “pay yourself first" method with automatic paycheck deposits to a savings account. 
 

Organize your financial life

You should keep everything at your fingertips - your budget, investments and bills in one place. Staying on top of your finances can be empowering because you know exactly where you stand. Review and assess your savings goals monthly.

The foundation for living within your means is to get your finances in order. That’s essential because you’ll need to calculate what it’s going to take to meet your long-term goals, for example, retirement. 

Get serious and take these steps:

Consolidate credit cards. If you’ve got three credit cards with different teaser rates or annual percentage rates, you may not have a grip on how much debt you’re actually carrying. Transfer the balances to one card (make sure you know what the transfer fees are before you do) and pay off the card with the highest rate first.

Review investments periodically. Keep on top of how well diversified you are in and make periodic tweaks to your portfolio.

Prepare for the worst. No one ever expects to get laid off. Built an emergency cushion. Six months is ideal. But if you’re carrying too much debt, pay that down first. 

Get life and disability insurance. All of us need life insurance - enough for a surviving spouse to pay off debts and to live comfortably for a time. 
 

Invest regularly and diversify

Start investing in an investment linked fund or a mutual fund. Make sure your investments are diversified in different asset classes for a steady return. 
 

Knowledge is power

Continue to explore your attitudes toward money. This is essential if you want to sharpen your skills as your money manager. 

Educate yourself. Get financial planning tips from YKConsultancy and other Web sites or magazines on how to invest or save for your future. The more you know, the better money manager you will become.