Financial Planning: Oh $#&@!


This topic brings up a lot of anxiety for me. For a long time I highly doubted that I would make it through my twenties so financial planning was never a real concern.

Now I’m approaching the end of my twenties and apprehensive of a future where I’m fifty or sixty and struggling because I didn’t put energy into building savings. As hard as things are for me now, how hard will it be in thirty years if I have nothing to fall back on financially?

I do have a 401K that I contribute 2% of each paycheck to. I don’t really understand how it works, but from what coworkers have let me know our company doesn’t match enough in order for it to be effective. For months I’ve had an e-mail saved in my inbox that offers a free meeting with a consultant, but even thinking about money stresses me out so it sits and waits under utilized.

I don’t have a savings account. It seems silly to me to setup a savings account when I live paycheck to paycheck. I’m assuming whatever I would transfer in I would transfer right back out as soon as my checking got low. Trust me, I know this is incredibly stupid, but for me it’s worked for a long time. I’ve considered going to my local bank branch and opening up a savings account, but I’ve heard that it’s better to use an online bank for savings so withdrawals and transfers aren’t as quick and easy.

Recently a friend mentioned the application Tip Yourself. It’s an iPhone app where you ‘tip’ your savings account whatever amount whenever you feel like it. You can see when other people ‘tip’ themselves and encourage one another.  It seems like an amazing idea, but since it’s only available on iPhone’s it looks like it’ll be a while before I can verify it’s effectiveness. Another friend recommended Acorns. It’s a neat app that rounds up your purchases to the next dollar and puts the “spare change” in an investment account. Honestly, I probably won’t download either because I’m too indecisive.

If you’re freaked out about finances like me there’s plenty of help out there, don’t worry! You know how I love my Forbes lists and this one written by Laura Shin breaks it down into 10 helpful tips (well, mostly helpful, hiring a financial planner isn’t in my immediate future).

I’m currently working on number four “Think of budgeting as a tool for awareness.” A friend introduced me to Every Dollar and I have been actively tracking my spending since July. It’s hard to log consistently because of guilt and laziness, but I have. The results give me a good snapshot of where I need improvement, plus regular tracking keeps my bills and debts fresh in my mind so I don’t spend completely recklessly.

As with anything, the first step is awareness. First take a look at where you are financially. You’ll then want to spend a good amount of time thinking about where you want to be financially. Think about your desires and big purchases you might want to make in the future. Then it’s time for the hard part: bridging the gap. The most helpful thing we can do to get there is follow Shin’s number ten on the list, “Behave for a really long time.” This doesn’t mean the death of fun. It means that you will need to restructure the way you currently operate in order to meet your goals. You can do it and so can I!

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