Financial Planning Advice for Beginners

Financial planning sounds like a term stuffy business people and lawyers would use. The truth is it is a term everyone should know and understand. Financial planning is more than just saving money and investing in a few stocks. Your very future could depend on it. So what exactly does solid financial planning really mean? It means to develop a plan that works for each stage of your life.

Create a budget

Yes, even young people who just started their very first job should sit down and figure out a budget. A budget is a record of how much money you have coming in each month and how much of it goes right back out. To make it easy, write down how much money comes in each month. Under that, write down each base bill you have (rent, utilities, food). Subtract your total base bills from your monthly income. This is how much you have left for secondary bills like car/home/medical insurance, cell phone, cable, internet, etc. Take these bills and subtract the total from what you had left of your monthly income. That amount is what you have left for entertainment spending like movies and eating out. When figuring out how much you spend on entertainment, be honest with yourself. Take this amount and subtract it from what is left of your monthly income. Not much left is there? This small amount is what can be put into a savings account. 

You are not done with the budgeting yet. Now it is time to sit down and figure out what expenditures can be eliminated in an effort to save more money. Look through your budget and see what items are unnecessary like magazine subscriptions or that expensive cup of specialty coffee each morning on the way to work. You might be surprised just how much you can save a year by eliminating that morning coffee stop. The key to a successful budget is to update it each month and stick to it. 

Do not overspend

When you go shopping, shop wisely. Stop or refrain from spending too much on an item. One savvy idea is to shop discount stores and outlets. You do not need to spend an absurd amount of money for an item that you can get cheaper somewhere else. It is actually okay to splurge on yourself or a loved one once in awhile, just don’t make it a habit. Splurging means a treat, something special, so when you do it all the time it isn’t special anymore. 

Invest wisely

If you feel it necessary to invest in stocks or bonds, then seek guidance from a financial professional at your bank. A wise investment includes other things like a college education, reliable car and stable home. 


One of the hardest things to do is decide not to buy something you really want. Instead of seeing something you want and buying it, pick something really special and then save up to buy it. This saves you from spending money all the time, plus it makes the purchase of the special item a cherished event. As a hard working person, you do deserve to spoil yourself from time to time. Otherwise, it would feel like you are busting your backside for nothing. Just remember to not overdo it, you are trying to take care of your future self too. 

The best advice one could receive when it comes to money matters is to know where every penny is going. Know how much is going into savings, IRAs, stocks and monthly expenses. Keep a running tally of all expenditures. The worst thing you can do is wake up one day and not know how you ended up broke after working hard most of your life. This is a terrifying reality that some people face later in life. Always think of the future and prepare for potential emergencies (broken leg, car repair, loss of employment) as well as for retirement. It might be more fun to blow money and have a good time, but limit that fun so you can enjoy your future too.