How A Financial Plan Gives You Permission To Spend

What if I told you that having a financial plan can actually give you permission to spend money?

Many clients are afraid they aren’t saving enough for their future. They live in fear that every dollar being spent today is a dollar they may need down the road to help fund their kids college education, retirement, and health care. The reason they have this fear is because they don’t know how much they need to set aside for their financial goals. When they do spend money, there can be a lot of guilt about it. Having a financial plan can help you know how much you need to save in order to meet your financial goals, and gives you permission to spend the rest!

Think about it… Let’s say you make $4,000 per month. Without a plan, you aren’t sure how much you need to save for retirement. Every time you go on vacation, eat dinner out, or even buy a latte, you are forced to wonder if you should have saved that money. But what if you knew that saving $1,000 per month will give you a high probability of meeting your financial goals? Then you could give yourself permission to spend the other $3,000. No more worrying if you should be saving, or can be spending!

It can be hard to balance spending on today’s wants with saving for tomorrow’s needs. Developing a financial plan can help you find that balance. What do you need to do to get started?

Set financial goals
Spend some time defining your financial goals. What does retirement look like to you? How much of your kids college education will you pay for? Do you want to buy a bigger home? These goals are the center of your financial plan.

Create a saving and spending plan
Start setting aside money from your paycheck for each of the financial goals. For goals over the next 1-3 years, keep this money in cash. For long term goals such as retirement, use retirement plans such as IRA’s and 401(k)’s to invest in mutual funds.

Prepare for an emergency
Be sure you have enough set aside in the event of an emergency. Having 3-6 months of living expenses is usually enough for most people.

Don’t be afraid to ask for help
If you are having trouble setting financial goals, or aren’t sure how much you should be saving, don’t be afraid to consult with a financial planner. They can help you pull everything together into one cohesive plan.

Just remember, financial planning is a process, not a one-time event. You can’t make a plan, then forget about it. It is something that takes attention periodically to be sure you stay on track.

We recently released a free guide to the 10 easy steps to secure your financial future. The above points are just 4 of the 10 steps to develop a financial plan. You are welcome to download it by clicking here.

So what do you think? Have you ever considered that a financial plan would actually give you permission to spend? I would love to hear your thoughts!

About the author

Alan Moore, CFP®, MS

Alan is passionate about providing individualized financial advice to individuals and families, regardless of their net worth, income or investable assets. An educator at his core, he strives to serve as his clients’ guide, available to help with the sometimes stressful or exciting financial situations that life inevitably brings.

Alan is the founder of Serenity Financial Consulting, which he started after noticing the lack of hourly, as-needed financial planning advice available to consumers. With experience working in several nationally recognized firms including Kahler Financial Group and Financial Service Group, Alan combines his industry experience and technical knowledge with his entrepreneurial spirit and penchant for teaching others to create a refreshing style of truly personal financial planning.

Alan is a Certified Financial Planner™ professional and Certified Retirement Counselor™. He earned his bachelor’s degrees in Family Financial Planning and Consumer Economics and his Master’s Degree in Family Financial Planning from the University of Georgia. Driven by his desire to educate, Alan also taught undergraduate financial planning courses while in graduate school.

Alan prides himself on being active in his community and feels privileged to have served in the Georgia National Guard for four years before receiving an honorable discharge. Originally from Georgia, Alan now lives in Shorewood with his wife Melissa, and enjoys taking advantage of the abundance of activities that Milwaukee has to offer.

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