The Parker Blog:

Planning for Success: Financial Planning and Budgeting Basics

David Paulson, a Financial Advisor with Northwestern Mutual, has been preparing for today’s uncertain times for over a decade.

“When I went to college, I thought I’d go more of a marketing role, but I’ve always been kind of a nerd when it comes to personal finance.”

His experience comes from both his time in the NFL, where he watched how people spent money on the high end, and afterwards while working in a credit union, which gave him experience helping people who didn’t have million dollar contracts. Now as a Financial Advisor, he finds himself offering advice and helping people across the spectrum of wealth.

an important place to start in any financial plan is to get an understanding of where you are currently at.

For those interested in learning more about budgeting and planning, he recommends getting a good understanding of where your money currently goes. He says, “an important place to start in any financial plan is to get an understanding of where you are currently at.” Afterwards, you should also think about what your own personal values are. Knowing your values will help you build a budget and ensure that your spending aligns with those values.

Another tip he recommends is to start building an emergency fund. While he recommends 3-6 months’ worth of cash savings, getting at least one month in the bank can help take care of any sudden emergencies that may come up. Individuals can free up money to contribute to their emergency fund in a number of ways. First, David recommends separating your essential expenses (such as rent, food, gas) from your discretionary expenses (Netflix, dining out). Another recommendation is to identify ways to spend less, such as shopping around on your insurance or phone plans, then putting the difference towards your emergency fund. Finally, make sure to set aside money towards the emergency fund with each paycheck. One way to do this is to set up your paycheck to divert a set amount directly into an emergency bank account. “Pay yourself first,” recommends David.

Pay yourself first

Finally, once individuals have created a budget and put money into an emergency fund, they should start looking at long term retirement plans. While there are a lot of options, for someone just getting started he recommends a Roth IRA. Roth IRAs take taxes out up front, at what your current tax bracket is (as opposed to traditional ROTHs, which tax your retirement when you take them out). Since most people just starting out will make more money later in their lives, its a smart decision to have the taxes taken out up front.

We covered additional ground, which can be viewed in our full video on our Youtube page. David can be reached with any questions at David.paulson @ David would also be happy to provide some budgeting worksheets upon request.

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