7 Financial Planning Tools for Responsible Money Management

Posted on - in Productivity Hacks
financial planning tools

Financial planning intimidates many, and those with lower incomes, like young people just starting out, often think money management is something only those with considerable wealth need to stress. But the less money you have, the more vital it becomes to use what you do have wisely.

Fortunately, you don’t need to hire a pricey financial planner. A host of online financial planning calculators exist to help you make the best money management decisions for any stage of life. Here are some of the best, so bookmark away and watch your wealth increase!

1. What Ride Can You Afford?

Buying a car takes a pretty penny, but you need to get back and forth to work, right? Use a car-buying calculator to determine how much of a ride you can actually afford.

If you’re lucky enough to have enough to pay cash, wonderful! If you’re financing, strive to keep your monthly vehicle costs at no more than 10 percent of your total income.

2. How Much Will That Degree Cost?

Student loans make up a massive part of the monthly budget for many young people. When you couple student loan debt with revolving credit like Visa cards, you can find yourself buried under a mountain of debt quickly.

While Navient may offer income-based repayment plans, other creditors will work with you, too. Strive to save up 25% of what you owe on revolving credit, then give the card company a call. Many will accept a lower monthly payment or lower interest rates when you indicate you’re working to pay down debt.

3. What’s the Cost of Living in Your City?

If you’re lucky enough to telecommute, you can save considerable cash by living in a low cost-of-living area. While those who commute to work may need to live near a major metropolitan center, those who need not do so can save a ton by living in a more rural area.

4. What Will You Owe the IRS?

Why wait until your business takes off or your boss issues employee stock purchase options to plan for April 15? While many people look forward to their tax refund check, few realize that annual windfall means the government has held their dough interest-free for the past year.

Strive to break even come tax time. W2 employees can fill out a new W4 form with their employer to adjust withholding. Entrepreneurs must make quarterly tax payments or risk hefty penalties and interest. Solid money management means keeping your cash working for you, not the IRS.

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5. Can You Afford a Mortgage?

Buying your first home means using considerable financial planning tools. You’ll need to know how much home you can afford or risk losing your digs to foreclosure.

Myriad online mortgage calculators exist, but not all represent what you’ll pay for your home. You’ll also need to budget for mortgage interest as well as homeowners’ insurance.

6. Is Your Portfolio Diverse?

Investing can appear difficult, but historically, putting money in the market has reaped greater rewards in terms of keeping pace with increases in living costs. Many financial planners recommend starting by investing in a few smaller stocks and building your portfolio over time.

Do you still consider investing in the market to be too risky for your knowledge? Consider investing in a mutual fund instead. Mutual funds take your money and invest it for you, lowering the risk of loss.

7. What Will You Need in Your Nest Egg?

Even those who love their jobs hope to retire someday. To do so in comfort, use a retirement planning calculator to determine what you’ll need to hang up your hat.

Starting early makes the best financial sense from the standpoint of money management. The earlier you begin saving, the more time you’ll have for interest to compound and your nest egg to grow in value.

Creating the Right Financial Plan

In decades past, the only real way to get a handle on your money was to hire a professional. Thanks to the wonders of the internet, now you can use a host of online financial planning calculators to help you make the most of your hard-earned cash.

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Kayla Matthews writes Productivity Theory and is constantly seeking to provide new tips and hacks to keep you motivated and inspired! You can also find her on Huffington Post and Tiny Buddha, and follow her on Google+ and Twitter to stay up to date on her latest productivity posts!

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