Earning 6.17%APY* on your first $25k? That's worth switching to!

learn more »

October is Financial Planning Month

October 3, 2023 • Adulting

5 steps to guide you towards financial wellness

October is Financial Planning Month and that means it is time to get down to business. Before the year wraps up, take time to evaluate where you have come, where you are and where you are heading.

Now the combination of these two words – financial and planning – might be intimidating. It can be hard to know where to start when it comes to planning your finances. However, with these five steps you can begin to create a financial plan that works for you.

Take time to imagine your future

Before you dive into the crunching numbers portion of financial planning, sit down and close your eyes. Imagine your future self. What will you look like? Maybe a little older and grayer? What will you need? Who will depend on you? How will you need to support them financially and yourself?

Research has found that by taking time to reflect on your future self will help you make wise decisions that will benefit you later down the road. Typically, people are more willing to allocate additional resources to things happening now because, “the emotions an individual feels in the present are much stronger than the emotions that the same individual expects to feel in the future.” However, it doesn’t take much reflection to realize that humans don’t react that way. We will feel something in the future just as much as we do in the present.

Building up an emotional connection with your future self is critical to motivate you to set up healthy financial habits today. So, in your financial planning make sure to keep your future self in mind. The choices you make today will impact the person you are tomorrow.

Set short-term and long-term goals

To make your financial plans reality, take out a pen and paper and jot down some goals. What do you want your money to do for you? Remember that your income is a tool to use.

Short-term goals include things like saving up for home improvements, a vacation and holiday expenses. These type of goals take less than a few years to complete, which can be easier to focus on. After deciding what you want your goal to be, look at your budget and see how you can put money towards it.

Canopy’s club accounts are helpful tools if you want to intentionally set aside funds for summer fun or extra holiday expenses. You can set aside a monthly dollar amount that will automatically transfer into your account year around. For the Summer Club account, funds are available on June 1st while the Holiday Club Account releases funds November 1st into your savings account. These accounts also earn interest while remaining safely separate from your regular accounts.

Meanwhile, long-term goals include things like saving up for college, a down payment on a home and retirement. These goals are important to set up with a solid plan to make sure they become more than just a dream. Talking to a financial coach is a great place to start when forming these lengthier financial plans.

If you set goals at the beginning of the year, check and see what progress you have made. If you are a little bit behind, reshape your goals to be able to end the year on a win. Every little step toward your goal is something worth celebrating.

Reevaluate your current budget

While you are looking at your goals, take a glance at your budget as well. What areas of your budget have you been spot on? What areas have there been unexpected expenses?

If there are areas of your spending that you could eliminate or cut back on, start trimming away. For example, what bills and fees have snuck in that you can address and scratch out?

While looking at your current budget, make sure take notes for next year’s budget. It is easy to want to want to wipe the slate clean when starting a new budget. The danger of doing this though is forgetting lessons that you have learned. Take notes on what is working for you and what needs to be changed. Maybe you realize you ended another stream of income to make ends meet or found that you need to changing your eating out habits to stay within your budget. Next, do the hard work of actually implementing the lessons you learned.

Plan for the unexpected

Financial planning is easy for things that are anticipated. Every month you know you need to pay for car insurance, groceries, etc. However, it is often the unexpected expenses that can wreck your budget.

It can be easy to put off starting an emergency fund. Or, if you start one, it can be tempting to tap into the funds for another expense. However, creating an emergency fund is crucial to your well-being and safety. Having one will prevent you from going into debt in case unexpected cost you can’t cover comes up.

A rule of thumb is to have 3-6 months of your expenses saved up in an account you can easily access. In a situation where you lose income, an emergency fund would support you for a while so you could cover essential expenses such as a mortgage payment or rent, insurance, food, etc. This emergency fund calculator can help you determine how much you should have saved up.

Talk to someone

Having someone to talk to as you plan your financial future can be helpful. Talking to an expert can also provide you with ideas you haven’t thought about - and someone to hold you accountable. Canopy’s free financial coaches are a great place to begin. Sign up for a coaching session today: canopycu.com/coach.

  • Share:

stay connected

More than just your credit union, we're part of your community.
Let us help connect you with your community.