New Year, New Personal Financial Plan

January 1st, in many ways, is just another day on the calendar. You wake up, you eat (black eyed peas and greens if you’re from the south like me), you check an item or two off your list, set a couple of goals, and you hopefully spend a little time talking with people you love. But symbolically, as most of us know, the New Year signifies an opportunity to grasp, well, new opportunities. Making changes, no matter the time of the year, isn’t easy. Habits take time to form. Sticking to our routine is easier than forging ahead into new territory and trying things we’ve never done or worse things we’ve previously failed at. Finance centric resolutions in the New Year are common. In fact, only one third of a recent survey’s respondents¹ chose not to include a financial resolution in their New Year plans. Since making changes to financial goals and creating new financial habits is on the short list for so many of us this year, how do we make the best use of our time and reach big goals quickly? Budgeting tops the list for me. Learning how to modify a budget when needed without relinquishing a commitment to long term goals is a skill worthy of pursuit. Second place on my list is expanding my financial knowledge, and my third and final goal is to prioritize debt repayment. How can budgeting, financial education, and debt repayment become part of your financial goals? As we assess our personal financial plans, understanding how these objectives can be approached can help set the stage for massive change and improvement over the next year.

Rebranding the Traditional Budget

Finding your flow when it comes to budgeting takes time. If you’ve been a reader of our blog for some time, you know that we are big fans of a budget. You may also recall that I have a complicated history with budgeting. I used to be allergic, but I’ve recovered. In fact, budgeting has become a way of life for me over the years, and I recommend this life changing habit to anyone who has curiosity about living life without the stress of finances hanging over their head. I had a conversation last night with someone in my family about budgeting. This person mentioned that budgeting is significantly harder to accomplish when you have a lower income. I agree it is harder, but it’s important. Many things of great importance aren’t easy.

Years ago, I worked in a commission-based industry. At the very beginning of my career, there was little to no consistency when it came to my income. There were good months and there were terrible months. Feast or famine was my norm. During this time, I adopted my first budgeting habits. It was hard to budget when there was barely enough money (or sometimes not quite enough) to make ends meet. It was vitally important, though, during those times for me to tell every dollar I earned where it was going that month. The basics were always the priority. Housing, utilities, medical care and prescriptions, food, and transportation were the first things to be figured out when I sat down to crunch numbers. After that, sometimes there wasn’t anything left. Sometimes, I had to get creative when menu planning. A time or two, I had to make some uncomfortable calls to get extensions on bills. Once, my electricity was turned off. There was no one to call for a bail out. Sink or swim, I was going to press forward solo.

Perhaps you can relate. There may have been times in your life where financial options felt few and far between. Perhaps budgeting felt completely beside the point because you were just struggling to get by. I challenge you to do what I did: assess your financial situation, no matter how good or bad, and find ways to take control. At the end of the day, a budget is a way to control your finances even when they feel beyond management.

Beyond a personal financial strategy, a budget helps with long term financial planning and is an important part of the process. No matter your financial situation, the first steps are relatively simple and the same.

• Assess your current finances by categorizing your monthly expenses and looking at a few months to compare how your costs fluctuate.
• Set a few financial goals such as saving money, paying off a debt, or investing in your future.
• Create a plan of attack including how you can best track your expenses, when you take time out of your day or week to review, and whether you want to use a cash system to help you stay on track.

Once you have a plan in place, you can get rolling. Are there more complex, detailed ways to set up a budget?² Yes, of course. We put together a comprehensive guide to budgeting last year for our readers. However, complexity doesn’t guarantee success. Like all New Year’s resolutions and goals, getting started is typically the hard part. These basic tips for starting a budget can be implemented quickly and rather easily. It’s a rebrand, if you will, of the traditional budgeting system. A simple, three step process that is open to your personal interpretation. After all, if it’s not workable for you, it won’t work.

The Knowledge Expansion Era

I don’t typically share information about my personal finances with friends or family, and I certainly don’t get deeply involved in telling stories about my finances when blogging. However, as the story above proves, this year is going to be different. Sharing information with our peers³ and even strangers about financial wins and woes can foster growth, learning, and making changes. When we feel inspired by the people around us in life and online alike, creating a personal financial strategy becomes easier. An understanding of key financial terms is a great jumping off point, but going a bit deeper includes finding out why it’s important to each of us personally. For me, I grew up in a home with a lot of financial stress, and understanding my finances coupled with controlling where my money goes each month gives me a sense of peace and stability. There are financial podcasts you can listen to which will give you a deeper understanding of financial concepts, and good old Google is also a great source of information. Let's say you're interested in starting your investing journey. A quick search yields results ranging from simple five step processes⁴ to sites dedicated to current trends⁵ plus ample information about investing. If you’re a true beginner on a journey to expand of your financial knowledge, brushing up on key financial terms is a great place to start. Here are 3 very basic terms to help you get the ball rolling:

• APR: APR, or annual percentage rate, is the cost of a loan expressed as a yearly rate.
• Credit Score: A number, usually ranging from 300 to 850, a credit score is an indicator of a person’s credit risk. In other words, your credit score lets creditors know how likely you are to pay your bills on time. A credit score is determined by a variety of factors, including but not limited to, an individual’s credit history, payment history, and their debt-to-income ratio.
• Interest Rate: The interest rate is the amount a lender charges a borrower, typically a percentage of the principal amount loaned.

Gaining an understanding of financial terms, how they’re used, and how to plan your financial future are all connected and important. You can start small by learning a few definitions, seek out financial experts to learn more about specific concepts you’re interested in, and keep in mind that learning is a lifetime endeavor! There’s always something new to explore. 

Ramping Up Debt Repayment

Finding ways to hasten debt repayment can greatly impact your financial future as well as your current financial standing. Every dollar not being directed at debt once the debt has been paid in full can be funneled into investing in the future or loosening the monthly pressure to make ends meet. That’s why it is incredibly important and beneficial to work as hard as possible to pay off debt as soon as possible. So how do you ramp up debt repayment and make things move more quickly?

There are many options when tackling debt with advice ranging from consolidating to strategically paying off debts in a particular order. However, two simple methods that can help are within your control to implement rather quickly as a first step.

Option A

Redirect funds within your monthly budget and create room for increased monthly debt payments. This option will require a strict adherence to your budget and dedication to accomplishing the end goal: being debt free and having more financial freedom. Finding room in a tight budget to allocate additional funds towards debt⁶ repayment can feel daunting. Starting with a well-planned, existing budget can help you accomplish goals more quickly. Once you’re comfortable with the budgeting process, rearranging to allocate funds as needed to debt repayment becomes a bit simpler. In some situations, however, there just aren’t enough dollars for increasing repayment by reworking a budget to make sense. Which leads us to...

Option B

Find ways to earn more money that could be added to your monthly debt repayment allocation. This option could include finding a side hustle, looking for a better full-time job, or finding other little ways to pick up a few extra dollars. You could host a yard or garage sale, find things around your home that you don’t need which can be sold, or even exchange unused gift cards for cash* at your nearest Speedy Cash store. Didn’t know you could sell gift cards for cash? One of the lesser-known in-store money services options at Speedy Cash is one of the coolest, in my opinion. It happens to all of us at one time or another, you find a gift card that your great aunt gave you three Christmases ago to a store you just haven’t used. It hasn’t expired yet, but you just wish you had the cash, not the card. Speedy Cash can help with that! Stop by a participating store and present the gift card to a store associate who can confirm the card is eligible for buyback. If the card is eligible, you can swap that gift card for cash! You can use the cash as you like, of course, but you could also throw it towards a debt repayment plan and speed up that payoff process.

*Not all cards accepted, please see associate for details

New Opportunities Abound

One of the benefits of financial planning is the opportunity to financially reset during the process. When you assess and create a new plan, you get a fresh start. Budgeting, expanding understanding, and focusing on debt will always be priorities for me personally, and that’s why I am so passionate about sharing these topics with Speedy Cash readers and customers. Grasping the opportunity to create a personal financial plan is easier to think about than to accomplish, that’s reality for many people. Making the decision to attempt progress and steady action, however, is always possible. Like any big life change, the mindset that you are running a marathon and not a sprint can help. Everything starts with a decision to try. No matter how far from your desired financial future you are in this moment, taking a step back to assess and think through even the most minute changes can result in massive long-term effects. It’s a New Year, let’s all make the most of it.