Financial planning and insurance
**Financial planning and insurance**
Do you ever worry about your finances? How do you know which financial milestones to expect or plan for? We all want to know we're making the most of our money and ensuring a comfortable future. If these questions are on your mind, then this article is for you.
We've created an infographic that provides extensive information about financial planning: the kind of tools you should have in place, considerations when filing taxes, what investments can be made based on your personal situation. There's also information on insurance plans and how they work with other types of plans such as retirement accounts.
The infographic also has a quiz for you to determine which financial milestone you're at and what you need to do next. Once you've completed the quiz, make sure you review your results. Some of the questions included in the quiz are meant to be self-explanatory, but if you're feeling uncertain about the answers, check out the additional resources below. Then follow up on your goals and start enjoying the peace of mind that comes with financial planning.
**Additional resources:**
- [**Steps to Financial Planning infographic by CreditDonkey](http://www.creditdonkey.com/financial-planning-steps.html)
- [**The New Yorker article: "What Everyone Should Know About Money" by John Cassidy](http://www.newyorker.com/magazine/2012/09/24/what-everyone-should-know-about-money)
**What is your current financial milestone?**
*Start now to reach your goals with steps from the infographic and these additional resources.*
# Step 1: **Get a Budget Going**
Step one should be easy. If it isn't, consider this: does going over your budget mean you're spending too much money? Maybe not. You might just be estimating your budget too low. The first step is to figure out what your total expenses are. This number should include your rent or mortgage, utilities, car payments, food and so on. Everything that goes through your bank account should be included here.
Once you have that number, figure out how much you actually have left over in your monthly budget. Are you living within the means you live on? If not, find out why. You may need to cut back in certain areas or establish spending goals for certain items. But don't get discouraged. If you've already established a budget, you're ahead of most people with money difficulties.
There are six steps you can take to manage your own budget, only two of which require money. The first - and best - thing to do is record everything that comes in and goes out of your bank account over the course of a few months. Learn to be aware; if there's a problem, identify it before it becomes too big to manage on your own.
# Step 2: **Find Your Money Leaks**
Money leaks are things that eat up your finances without you even noticing they're gone. They're little habits or pleasures that add up to a lot of money over time.
If you want a better financial life, start tracking your money leaks. Find the big ones - like credit card debt, an expensive car or something else that's not related to your income. Learn what makes you spend too much, and think about why you need it in the first place. Once you're aware of your real spending habits, it'll be child's play to cut back on them and save money with the other parts of your budget.
# Step 3: **Pay Off Debt**
Once you've found your money leaks, the next step is to pay them off. If your debt has a monthly payment, that's easy enough to cut out of your budget. Look at things like student loans and credit card bills; if you're paying interest on them each month, it might be worth refinancing - especially if you can save money in the process.
If it's cheaper to pay off your credit cards than it is to keep making minimum payments every month, then make that change first. Otherwise, find the debt with the highest interest rate and start paying it off immediately. Reduce your debt as much as you can, but don't forget to:
- Avoid any other type of debt in the future. The more you have, the harder it will be to get out of debt. If you want to start saving for a house, car or retirement account, this is the time to do it.
- Pay more than your minimum payment every month. If you can pay the full amount of your monthly bill, do so (as long as it's not something like a mortgage that could cost a lot if you fall behind). The less interest accrued on all your various debts, the easier they'll be to manage in the long run.
# Step 4: **Build an Emergency Fund**
No matter what your income is, you should have 3 months of living expenses set aside in case something goes wrong. This is for more than just disasters like hurricanes or floods; it could be an injury that keeps you from working, a car accident that costs thousands of dollars to fix or any other number of unexpected events. If you don't have this much money in the bank already, figure out how to start saving. It can be a slow process, but take it one month at a time and put away at least 10% of whatever income you make every month. You can begin making progress by putting a little money away each month.
# Step 5: **Pay Off Credit Card Debt**
If you have credit card debt, the best way to start paying it off is with minimum payments. If you can pay only that much each month, you won't be in too much of a hurry to get rid of the debt. But if you can pay more than that, don't defer all available payments. One small payment left over when your minimums are met will eat up interest accrued on the extra amount for months to come - even if you don't make another payment for months or years after that.
Conclusion:
*Start Now*
To get started, follow the steps outlined in this article and add up your total billable expenses. Then, start tracking your spendings and find your money leaks. Once you've established a good routine, add emergency savings so you'll know you have enough to get by in the case of an unexpected event.
What next?
Finances might be an entirely new topic for you - here are some more helpful articles to check out:
- [The New Yorker article: "The Problem with 401(k)s"](http://www.newyorker.