Want to Be a Better Financial Planner?

Written on October 29, 2013

How confident are you in your ability to manage your financial affairs? A recent survey conducted by the Certified Financial Planner Board of Standards, Inc. and the Consumer Federation of America found that confidence in regards to money management is closely correlated to financial planning behaviors.

The survey examined 1,002 household financial decision makers and scored them based on the degree to which they engage in any of 15 stated financial planning behaviors (including a written financial plan, household budget and debt management). Less than 20% of the surveyed households felt comfortable managing their financial situation.

Effective Financial Planning

Want to be a better financial planner? Consider these actions:

  • Examine your household expenses. There are excellent online tools, such as Mint.com (available free), that will monitor and categorize your expenses based on the activity downloaded from your bank and credit card accounts. You may be surprised where you spend the bulk of your income.
  • Create a budget. Once you have a better idea of where you spend your money, you can set goals to cut back in areas of excess and generate additional cash available for savings. Quicken and Money are two software products that can help you stay on track. Use it regularly as a measuring stick to monitor your progress.
  • Set a savings goal. Build an emergency savings fund with 3-6 months of expenses. Have funds directly deposited into your savings account. If you don’t see the money, it is easier to keep from spending it.
  • Pay off debt. If you have credit card, student loan or other consumer debt, create a plan to pay it off. Popular radio personality Dave Ramsey recommends paying off debt one bill at a time. Under his system, rank your debts from least to greatest. Use your available cash to pay the first debt down as quickly as possible, while making the minimum payment on your other debts. When that debt is repaid, start with the second on the list. Other advisors recommend ranking debts from highest rate to lowest, which is mathematically the most efficient way to repay debts. What is most important is that you create a plan, stick to it, and look forward to a more flexible budget without the burdens of debt. Dave’s book, The Total Money Makeover, can help you get started.
  • Build a net worth statement. Your new budget helps you see what you earn and what you spend, but the other side of that picture is what you own and what you owe. A net worth statement lists the current value of the items that you own (bank accounts, cars, houses, investments) and subtracts from that the amounts that you owe (credit cards, student loans, mortgages, consumer debt) to calculate your “net worth.” Review it every year to see if you’re improving. Quizzle.com is a free resource provided by Quicken that helps track your net worth.
  • Educate yourself. Review your credit report both for accuracy and your own knowledge. You can access your credit report once per year for free at AnnualCreditReport.com. Also, make use of readily accessible financial resources (NFCC.org, your bank or credit union, Money Magazine, etc.).
  • Save for retirement. Since you are reading this newsletter, you have at least begun this process. But are you saving enough? Use an online calculator available through many financial websites to help determine if your savings are sufficient to meet your retirement goals.


Small changes can make a BIG impact in your financial confidence and your financial situation. Get started today.

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