I am a financial planner and this is how I manage my own money

  • My job is to help others manage their finances, but I always make enough time to manage my own.
  • I set financial goals that are realistic and stick to a detailed and strict budget to achieve my goals.
  • I also automatically save 30% of my earnings and review my portfolios and progress annually.
  • Read more from Personal Finance Insider.

Managing your money can initially seem daunting and time-consuming, especially when there is a ton of information available. But taking control of your financial well-being will better prepare you for the future.

I’m a financial planner, and while I usually help others manage their money, I always make sure I set aside time to manage my own finances. These are the four things I do to manage my money effectively.

1. I set financial goals that are realistic and flexible.

Everyone should have financial goals, but your goals should make sense to you and your financial situation. They should align with your life and what you value in life.

I definitely don’t want to rent forever, so one of my goals is to save up for my first home. Another goal of mine is retire early. Once I set these goals, I break them down into manageable steps to get there.

For example, I used a calculator to predict How much money would I need for retirement?, and I am setting money aside each month accordingly. I am also investing money each month which will hopefully serve as the down payment on my first house.

Financial goals can be big and small: I recently saved up to buy a pair of shoes I’ve been wanting for a while and I’m putting some money away in a savings account for holidays to Japan next year. The point of setting a goal is really to motivate yourself and keep you on track.

2. I stick to my budget

There is no right way to create a budget, but there is a correct way to use a budget: use it consistently. Regularly recording your spending and savings will help you better understand where your money is going and coming from. Identifying trends in your spending is key to creating better money habits.

I recommend choosing whatever budgeting method works for you and sticking with it. Personally, I budget the old-fashioned way, on a spreadsheet I created myself.

I use fairly granular tracking; For example, I have a specific line item for Amazon purchases and another for media subscriptions. While this level of detail might not work for everyone, it helps me pinpoint exactly where I’m spending most of my money and helps me find areas to cut back.

I usually enter my purchases daily so I don’t forget them. At the end of each month, I’ll go back and review my monthly spending and see how well I’m on track to reach my biggest money goals. That way, I can make adjustments for the following month.

3. I made automatic savings

currently I have an emergency fund with about four months of expenses, and a high yield savings account for “fun” purchases such as travel or luxury clothing. I have three retirement accounts: a 401(k), Roth IRAand Roth 401(k) — and two investment portfolios.

I save about 30% of my gross income: 13% in my retirement accounts and the remaining 17% in my investments and savings. I’m regularly depositing money into all these accounts, but I never have to think about them, because I do all my automatic contributions.

It only takes a few minutes to set up, but it prevents me from forgetting to contribute money. It also helps me prioritize my savings and reduces the urge to spend money.

I also make all my bill payments automatic – the last thing I want to deal with is a late rent payment.

4. I review my financial progress annually

At the end of each year, I take a step back and reflect on the last 365 days of my financial plan. I review my goals and review how I am tracking to reach those goals. This is also the time that I will make adjustments to my plan as well.

I will pay close attention to the allocation of my investment portfolio: if I feel that it needs to be rebalanced, I will usually try to sell my shares before the end of the year so that I can write off any investment losses on my income taxes. .

I also try to take a moment to pat myself on the back for any positive progress I’ve made, big or small. Rewarding myself for sticking to my goals will reinforce my good habits for years to come.

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