3 Ways To Celebrate “Let’s Get It Done” Month

October 16, 2017

October is Financial Planning Month! It may sound nerdy, but obviously I’m celebrating — every month is Financial Planning Month for me! In general, national day designations are meant to bring attention to specific topics, which is great. However, since there are 116 National Calendar days in October alone, financial planning can easily get lost in the shuffle.

The other thing is, simply bringing awareness to financial planning is not enough, we all need to take action. With that in mind, I propose we think of October as Financial Planning ACTION Month. Here are some actions to start a financial plan, or get your existing plan back on track:

Prioritizing your finances

Once you have paid your monthly living expenses, look to prioritize your savings and expenditures in the following order:

  1. Build an emergency fund up to $1,000 to take care of minor unexpected expenses like medical bills and car repairs.
  2. Contribute to your 401(k) at least up to the percentage to take full advantage of your company match – that’s free money you don’t want to pass up.
  3. Pay off all high interest (6% or higher) credit card debt, and keep the balances at zero each month (see below).
  4. Turn back to increasing your emergency savings from $1,000 to an amount equal to 3 to 6 months of living expenses. This way you will be covered if your income is unexpectedly reduced.
  5. From here, refocus on retirement savings or other savings goals.

Paying off high interest debt

The first step is to take an inventory of debt and list the balance due, interest rate, and minimum monthly payment. After making the minimum monthly payments, direct any excess cash flow to either

1) the highest interest rate card (this will save the most money, as the Debt Blaster calculator shows) or

2) the card with the lowest balance (this will help build momentum).

Either choice is great; it’s just a matter of personal preference. By sticking to one strategy, you will pay off your debts sooner and pay less in finance charges. Once this debt is paid off, be sure to redirect that monthly payment you are accustomed to making toward a specific savings goal like retirement savings.

Running a retirement calculator

Studies have shown that those who run a retirement calculator have a much higher level of retirement preparedness than those who do not. Knowing is actually half the battle! A calculator will tell you whether you are on track to meet your goals.

Armed with this information, you can determine if you need to stay the course, or make some changes to get back on track. If you know that your 401(k) contributions need to be increased, look for ways to reduce non-essential expenses and redirect those savings to your 401(k).

So, let’s make Financial Planning ACTION Month one to remember by taking action! Once you have your plan in place, celebrate by ordering a pizza. After all, October is also National Pizza Month!

Want more helpful financial guidance, delivered every day? Sign up to receive the Financial Finesse Tip of the Day, written by financial planners who work with people like you every day. No sales pitch EVER (being unbiased is the foundation of what we do), just the best our awesome planners have to offer. Click here to join.