10 Financial Planning Strategies That Will Help Secure Your Future

If you count yourself among the 72% of the country who consider themselves not financially secure, it's time to do something about it.

Financial security isn't easy to come by. With recent inflation boosting the cost of housing, food, and transportation, it's become harder for the average American to visualize a stable future. The average salary in Minnesota is around $63,000, with the monthly cost of living averaging around $5,000 for a family of four.

So, to make it all work, you need to take financial planning strategies seriously. We all want to create wealth, but doing it requires constant attention. In today's post, we'll help you develop a financial plan with actionable strategies that you can turn into habits.

At Phillip James Financial, we've helped countless Minnesotans achieve financial freedom. Keep reading and find out about some of the strategies that we've discovered work best for our clients.

1. Outline Your Plans

If you're going to create a financial plan that you can implement into your daily life, you need to sit down and make sense of it all. To do so, sit down and create a written outline where you can document your current income, monthly expenses, investments, and retirement savings.

Every financial plan needs an objective, a way to measure your results, an overall time frame, and the actions you need to take to achieve your goals. An outline will give you a physical thing to view again and again, giving you a thorough guide for long and short-term objectives.

2. Create a Monthly Budget

Whatever your financial goals are - saving for retirement or simply creating more financial stability - the first thing to do is start budgeting. A monthly budget will not only give you a clearer picture of your income and expenses, but it will also give you a firm and immediate plan for achieving your financial objectives.

A personal budget tells you how much money you have coming in from your salary, bonuses, investments, and benefits. It also tracks your expenses, ensuring that you don't end up in the red. Ideally, a budget will help you save money to secure your future.

There are numerous budgeting methods people use. Some of the most popular include the 50-30-20 method and the zero-based budget method. To figure out which one will work best for your situation, it's best to consult a financial planner to gain more insight into the pros and cons of each.

3. Cut Out Unnecessary Expenses

Whatever budget style you decide to go with, a common thread for improving your financial situation will be cutting out unnecessary expenses. We all indulge in unnecessary things, but if you're trying to create more financial freedom, it's important to identify where you can spend less.

These expenses include obvious things like eating out at restaurants, buying clothes, and subscription services. They also include more in-depth things like credit card interest and bank fees.

When you're formulating a budget, you'll find out where your money is going. Take the time to go through your expenses and figure out what you can cut out. Overspending makes it extra tricky to achieve your financial goals.

4. Start an Emergency Fund

Anytime you're dealing with an expensive emergency, it can cut deeply into your savings. For that reason, it's always smart to put money aside in an emergency fund to prepare for these things.

Emergencies come in many forms. It could be expensive car repairs or medical bills, or you could lose your job. Most experts recommend you have the equivalent of a few months of expenses in an emergency fund at all times. 

Start by putting a small investment into a separate account. With each paycheck, put a small amount away into the emergency fund until you're satisfied with the amount you have saved. 

If something happens and you need immediate money, your foresight will cover you in the short term. Once the emergency is paid for, start replenishing the emergency account again over time.

5. Optimize Your Contributions

As you get older, it becomes more and more important to prepare for medical expenses. Maximizing your HSA contributions - $4,150 for individuals and $8,300 for families in 2024 - will help you tackle any unforeseen medical bills.

A lot of people who are saving for retirement worry about contributing too much to their HSA coverage, but you don't lose that money if you don't need to use it. Allow the account to accumulate until your retirement and have that peace of mind over the long term.

Similarly, the IRS has upped 401k contributions to $23,000 for 2024. The more you're able to contribute, the better you'll set yourself up later on. Of course, if you can't invest the full amount, contribute as much as you can afford without destabilizing your budget.

6. Pay Off Your Debts

Debt remains a major issue for most American households, with the average consumer household debt sitting at over $100,000. When you're paying interest on large amounts of debt, it can feel neverending. The quickest way to reach financial freedom is to start paying off your debts immediately. 

There are several ways you can do this, but you should start by making a list of your debts and how much you can allocate to them each month. The most popular debt payment methods are the snowball method, the debt avalanche, and debt consolidation.

With the snowball method, you pay off your smallest debt first. Once that's gone, you use the money you save to quickly pay off the next largest debt, and so on until you're debt-free. The debt avalanche works oppositely, so you pay off the largest debt first and work your way through from the top down.

Debt consolidation is when you combine all of your debts into a single account. The idea is to pay less interest and avoid taking on any more debt until the account is paid off. It's also easier to keep track of your debts when they're all in one place.

7. Review Your Investment Portfolio

Your investment portfolio is how you can passively create wealth and achieve complete financial security deep into retirement. When you have long-term investments that pay good dividends and you manage your money well by paying debts down, you'll never have to worry about money.

So, what's the key to investing? Diversify your portfolio with a wide range of investments in disparate areas. Doing so allows you to proactively tackle your investing goals and mitigate risk at the same time. 

8. Automate Where Possible

Modern money management makes it easy to manage your budget, pay off debts, and keep an eye on your spending. You can tackle all of these things by automating your banking so that you don't have to rely on your memory to stay on top of it all.

For example, you can set payment reminders for each of your expenses, whether it's your car payment or mortgage. You can also set up automatic withdrawals for utility bills, credit card payments, and 401k. 

Although it'll make your life easier, automation can also make you forgetful. It's still important to keep an eye on your spending and budget to make sure you're hitting your financial goals. Use automation to avoid incurring late fees and other unnecessary expenses.

9. Lower Your Tax Payments

The IRS can be intimidating, but you shouldn't let that stop you from trying to lower your tax payments as much as possible. Start by finding out what tax bracket you belong in, then submit claims for the things that apply to you. 

For example, you can get deductions for things like childcare costs, any charitable donations you've made, and medical expenses. Submit those claims with whichever member of your household has the highest tax rate and you'll lower your overall tax bill.

There are plenty of small tactics you can implement to avoid paying unnecessary taxes. Speaking with a tax professional or financial advisor is the best way to find these tactics. Add them all up and you can save hundreds on your tax bill.

10. Work With a Financial Advisor

That brings us to our last tip - working with a financial planner. If your financial future is a source of anxiety, the best thing to do is sit down with someone who can look at all of your finances and help you develop strategies that make sense for your situation.

All of the things we've discussed thus far are easy strategies to implement, but if you're in a particularly tricky situation, or you're preparing for retirement, establishing financial security can be more complicated. Experienced financial advisors have seen it all, so they can navigate all of the complexities of money management.

Develop Financial Planning Strategies With Phillip James Financial

Now that you know about some of the best financial planning strategies, you can look forward to a more secure financial future. Ultimately, you'll never have more security than when you work with a high-level financial advisor, like the ones at Phillip James Financial.

As a multi-disciplinary financial advisory practice, we're uniquely qualified to help you with everything from tax planning to investing and more. Contact us today to schedule a meeting and allow us to help you invest in your financial freedom.