A financial plan can be your guide. Take these 10 steps to put it to good use

A financial plan is a guide that you carry. It helps identify your goals, guides your decisions and supports your achievements. Benjamin Franklin once said, “If you fail to plan, you are planning to fail.”

Read on to learn 10 do-it-yourself steps from financial planners.

▪ Set Goals — Ask yourself these guiding questions.

What are you talking about when you talk about money?

Imagine you are financially secure, with enough money to take care of your needs. How would you live your life?

How would you describe your relationship with money?

What financial problem would you like to solve?

▪ Gather – Every account, debt or policy should be gathered and sorted. You will need a place for your income, retirement accounts, insurance accounts, annuities, Social Security statements, non-retirement accounts, checking and savings.

▪ Net-Worth — Organize the accounts you gathered into three categories below and make a list of the account details: debits, assents, insurance policies.

Take a sheet of paper and make five vertical columns. The first column should be titled “Due Date.” The next column is “Description,” followed by columns titled “Payment,” “Amount” and Interest.”

▪ Review your Income – Determine gross income and the amount of deductions. If you determine income from your paycheck deposit, you’ll miss valuable deduction information into employer retirement plans or other pre-tax contributions to your insurance plans, flex spending accounts (FSA) or Health Savings Accounts (HSA). If you aren’t participating in any, check availability and whether they are appropriate for you.

▪ Review your Expenses – Review your purchases from the last 30, 60 or 90 days. List with details by categories in a second table, this time with three vertical columns titled “Date,” “Description” and “Amount.”

First, Start with Essential re-occurring expenses. These may vary. If so, average them. Include rent, electricity, insurances, loans, daycare and other re-occurring, non-negotiables.

Next, record discretionary expenses like groceries, restaurants, gifts, extracurricular and hobbies.

Next, review your savings into retirement accounts, personal accounts, HSA’s, FSAs. You may need to review your retirement accounts or payroll.

Finally, total each category in a simple list that should include reoccurring, discretionary, savings, and total expenses.

▪ Compare your income and expenses – Is there anything that you’d change to align with your goals in step 1? What changes do you need help with?

▪ Set up your Spending Plan: – This is the fun part.

Decide which goals you will work toward from step 1:

Determine the amount of money to set aside.

Every paycheck allocates towards those goals.

▪ Understand your Social Security and Medicare Options

Open a Social Security account to understand your Social Security income in retirement. You can open an account at https://www.ssa.gov

Learn about Medicare by visiting the Medicare website and downloading their information book. https://www.medicare.gov/medicare-and-you

▪ Review your insurances

Health, Life, Auto: Contact an Independent Insurance Broker and shop your options.

Life: As circumstances in your family change, along with the market and inflation, your insurance policies may not be suitable for your needs

Term: If you have a term policy, will it be in place for the time needed? Will it cover the goals you have for it?

Whole Life: If you have a policy with cash value, do you know how it works? Is the premium payment too high for your budget or too low for continuity? Your policy may not last if the premium payment (plus cash value) doesn’t cover the true cost of insurance. Do you know that true cost?

To answer these questions, a call to your insurance provider is essential.

▪ Review your Asset Allocations and Annuities

Review your asset allocations and risk tolerance with your investment advisor. Your asset mix and tolerance change over time. Shouldn’t your account reflect that? Don’t forget to bring your employer retirement accounts and other assets in to allow for holistic consideration.

Amber Bletscher is a member of Financial Planning Association of Greater Kansas City and works with F4 Wealth Advisors in Sabetha, Kansas. She believes financial planning provides an opportunity to be prepared and successful.

This story was originally published September 14, 2021 at 5:00 AM.