Financial Peace Through Planning

As you may already know, this week is National Save for Retirement Week. In that spirit, I want to spend some time today discussing the peace brought on by having a sound financial plan.

It should come as no surprise that planning for the future and saving for retirement can bring a great deal of peace to those who do it. Unfortunately, many Americans are so mired in debt that they can’t make any progress toward their long term goals.

You don’t have to have $500k in the bank to achieve financial peace. All you need is a solid financial plan. This will serve as a springboard for eliminating debt, building your savings, and getting you back on the road to a comfortable retirement.

“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”

-Brian Tracy

Financial peace may be closer than you think…

When I say “financial peace, ” what comes to mind?

You may have answered with one or more of the following:

  • No more creditors calling
  • No credit card debt
  • A paid off mortgage
  • Freedom from overdue bills
  • A bunch of money in the bank
  • Maxed out retirement contributions
  • A diversified investment portfolio, etc., etc., etc…

While all of these are necessary pieces of the financial peace puzzle, most of them will probably take awhile to achieve. Wouldn’t it be cool if you could gain a great measure of financial peace in just a week or two?

Actually… If you follow the simple outline below, you will very quickly find yourself on solid footing and on your way to increased financial peace and prosperity.

The uneasiness of financial uncertainty

Only a fool thinks he can properly plan for everything. Much the same, it is foolish for us to walk through life with no financial plan at all.

“Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing… Those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it.”

-Noel Whittaker

Consider the runner. Though he can never prepare for all the “what ifs” a race may bring, there are a few things that he can be certain of. For example, he cannot control the weather, but he can be prepared for different types of weather. He cannot control the length of the race, but he can know how long the race is and prepare accordingly. He can pace himself based on his knowledge and preparation and, at the very least, save enough of his energy to reach the finish line.

It’s much the same with our finances. We can never plan for every situation that may befall us, and only a fool would try to do this. What we can do is start with a few basics, take inventory of what we have, decide where we want to go, and develop a plan to get us there.

Once you finish planning, you still have to execute your plan to reach your goal, but… Once you have that plan, you can rest easy knowing that now it’s just a matter of follow through. There is peace in planning!

A simple plan for achieving financial peace

Does planning overwhelm you? Then start simple and refine things over time. Remember that “a journey of a thousand miles begins with a single step!”

Use the following outline to start forming your plan to gain control and peace over your financial situation:

  • Get to know your debt and get angry. You’re never going to formulate a plan until your establish a proper relationship with your debt. One of the best things I ever did was to figure out how much interest I was paying on my debt. Simply take an inventory of your loans, and calculate how much interest you pay toward your debts each and every month. Once you figure out how much money you’re paying in interest, you’ll be motivated to move on to step two.
  • Focus on needs and stop spending foolishly. Sure, you’ve made bad decisions in the past, but that’s behind you now. Start differentiating between needs and wants, stop buying things you don’t need, and focus your available funds on true necessities. Take it one step further by applying wisdom to your necessities. Food is a great example. Instead of simply buying everything you want, employ these grocery hacks to help cut corners.
  • Start an emergency fund. Sell unneeded items, stop going out to eat, use your grocery savings from step two and save at least $1, 000 as quickly as possible. This step can be accomplished much faster than you think, and will bring you a great deal of security and peace all by itself… And it only gets better from here!
  • Keep a spending journal. Do this. Don’t skip it. I’m serious. If you’re like me, then even now you’re probably making excuses as to why you don’t need to do this. Knock it off. Keeping a spending journal is the cornerstone of living on a spending plan (a.k.a., a budget.) The cool thing about a spending journal is that it’s way easier to start than a budget. A budget is a living document that will take months to get into working order, but you can successfully implement a spending journal right now! Stop making excuses, get a small notebook, and keep it on you at all times. I carry mine in my man purse. Yeah you read that right… I carry a man purse – get over it.
  • Start budgeting. As I mentioned above, this is something that will take time, so don’t feel like you need to master it in your first go-round. Now that you’ll be keeping a spending journal, this will be much easier than you think. Begin with a very simple budget and tweak it both in accuracy and completeness as the days go by.
  • Repay high interest debt with your new found excess. Trust me. If you’ve followed the steps from above you will have quite a bit of extra money each month to help repay your debt much faster than expected. Whatever you do, don’t be tempted to spend it! Instead, use it to repay your debt ASAP. If you’re like me and you find it necessary to save while focusing on debt repayment then you can follow the 75/25 debt repayment and savings plan. Die hard Dave Ramsey fans will disagree, but this has proven to be a wise choice for my wife and I several times over.
  • Build your emergency fund to 3-9 months worth of expenses. Now that your high interest debt is gone, you’ll want to build up your emergency fund. My wife and I plan to save enough to cover 6 months worth of expenses. You’ll want to keep this money in a place where you can easily access it, like a high yield savings account. This money is not an investment. Rather, it should be viewed as personal emergency insurance against unexpected events.
  • Begin saving for retirement. Once consumer debt is gone and you’ve built up your emergency fund, use your newly developed financial discipline to begin saving for retirement.

There… Doesn’t that feel good?

“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”

-Brian Tracy

Even though you haven’t saved a dime more than you had before creating your plan, you can walk away from this article with confidence, optimism, and a new found measure of financial peace concerning your future.

One last piece of advice – make sure you follow through!

Now that you have proper direction, all you need is determination, patience, and a little hard work. It’s amazing how a simple plan can have such a huge impact!

10 Responses to “Financial Peace Through Planning”

  1. Anonymous

    Excellent Matt! A very practical, real-world plan that I believe anyone can “flesh out”.

    What I’ve found helpful along with using the spending journal, is to go back over the last 3 months of bank statements with a highlighter and mark all transactions where you have nothing to show for it (except groceries,gas and “fixed” bills); we’re looking for “leaks” in the “bucket” so to speak, then re-direct some of those “lost” dollars towards debt reduction and savings!

  2. Anonymous

    I enjoy the positivity in this post–it’s spot on!
    For those at the beginning of this process, it can be very intimidating…I’d like to suggest a site that’s a step one to financial understanding (for inputting income, expenses and debt), like a spreadsheet, but easier. The info is also stored and can be tracked over time.

  3. Anonymous

    It is awesome to realize that simply putting a plan in place will deliver so much peace, even when still in debt.

    @Neal: I LOVE your comment! When people argue about paying off mortgage/student loan debt or investing I always want to chime in about the freedom gained through paying things off. No investment will give you that same freedom. Thanks for the encouraging testimonial!

    @Rex: love the premise of “taking control” that is definitely something people need to see. If they do not control their money, the opposite will happen, & it is never a pretty thing!

    @Jason: I agree. I love both of those programs, in fact, the wife and I are in FPU right now! Week 4.

  4. Anonymous

    I completely agree there is peace in having a plan. That’s why I’m such a big fan of the Money Map by Crown Financial Ministries and Dave Ramsey’s Baby Steps. Knowing you have a plan in place and a focus is so comforting. At that point, there is no reason to be overwhelmed by finances. Follow the plan and when you’re driven off – course by something, do what it takes to resume the plan as soon as you can. Well said, Matt.

  5. Anonymous

    Yes we need to have a plan in order for us to be successful at anything we want to achieve. To gain financial freedom we have to be determine to avoid debt or to sacrifice in making the payments that will enable us to be debt free.

  6. Anonymous

    I love the premise of the article, and completely agree. We’ve paid off our non-mortgage debt, and have a financial plan, and it has been a load off my mind. It truly is financial peace -instead of the financial turmoil we used to have.

  7. Anonymous

    Great article Matt! You have to be proactive if you want to make changes in your life. You have to take control of your financial situation, just like you do with your career and other aspects of your life. You can not sit around and wait to win the lottery. This list is a great jumping point if you do not currently have a plan.

  8. Anonymous

    Matt…..bravo. Keep the message coming.

    I paid off my debt and mortgage and feel 10 years younger and 30 lbs lighter.

    While I know the numbers indicate I’d have done better to carry the debt, I get a lot more “life” by being free.

    I encourage everyone to look at the “life” payoff rather than just the numbers.

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