Financial Planning: How To Maximize Your Finances
Do you have a sound plan for your money? Do you know how to create an effective financial plan, that will earn you the results you desire?
Financial Planning is key to achieving your financial goals.
As a professional in accounting, finance, or tax, you already know how to effectively generate income. However, do you know how to maximize the use of your earnings? If not, I would encourage you to get started on building a financial plan that will enable you to make the most out of your salary!
In this article, I will provide four simple steps that you can take today, to start working on building an effective financial plan that will benefit both your personal and professional goals. By having an effective financial plan in place, you'll be better equipped to maximize the use of your money.
Tip #1 - Establish your retirement plan
Many young professionals overlook the importance of setting up a retirement plan. If you’re a small business owner, you no longer have the benefit of having an employer take care of all the nuances of setting up a retirement fund for you.
Luckily for self-employed individuals, there are financial institutions such as Vanguard, Fidelity and Merrill, who can help you get started on retirement planning.
As a self-employed individual, you can choose from a variety of small business retirement plans to help you achieve your retirement goals. The most common types of retirement plans are:
Individual 401(k): This plan maximizes retirement savings if you're self-employed or a business owner with no employees (other than a spouse).
SEP-IRA: The Simplified Employee Pension plan is simple, flexible, and will allow you to contribute generously towards your retirement.
Simple-IRA: A Savings Incentive Match Plan for Employees is the perfect option for self-employed/business owners with employees. This plan is a basic retirement plan and allows your employees to make their own contributions.
Choosing a plan that works best for you, will take careful consideration. Any retirement plan you choose, will allow you to invest now for financial security when you (and your employees) retire. In addition, there are significant tax advantages and other incentives available to you and your employees, when setting up and operating a retirement plan.
Let your money grow tax-free
Contributing to a retirement plan earns you stellar benefits such as: tax-deductible employer contributions, compounded interest, dividends, and capital gains, which provides the opportunity for your retirement account to generate additional earnings!
Don't delay any longer in establishing a retirement plan. If you are unsure of where to start, consider consulting your trusted CPA.
A Special Note: Head over to RetireGuide for free access to valuable information relating to retirement planning. Also, check out this great guide on retirement planning as published by RetireGuide, Retirement Planning Guide: Investments, Health & When to Start!
Tip #2 - Pay down high-interest debt
Once you have started saving for retirement, it is time to tackle your debt. If you have consumer debts like credit cards or car loans, I highly advise you to pay these down ASAP, as these types of debts typically carry high-interest rates.
As Dave Ramsey recommends, pay the minimum payments on all your debt, while attacking the debt with the highest interest rates. Once you have paid off the debt with the highest interest rates, you'll then move on to the debt with the next-highest interest rate.
Commit to a realistic personal financial goal
The objective here is to free up your cash, so you can enjoy a brighter financial future. Be realistic about what you can afford to pay down and commit to doing so.
"If you’ve got multiple debts, pay off the smallest debt first" – Ramsey Solutions
Tip #3 - Establish an emergency fund
Having an emergency fund in place, ensures you stay afloat financially without depleting your bank account. I highly recommend having a minimum of 3 months of expenses saved up, so you are best prepared for the unexpected, and your finances don’t suffer as a result.
Do not, I repeat, do not rely on credit cards, insurance, or withdrawals from a retirement plan to cover emergency expenses. Doing any of these have the greatest potential to put you in great financial distress.
“56% of people in the United States don't have a rainy day fund that would cover 3 months of expenses” - FINRA
Tip #4 - Build up your investments
There are many investment products on the market today, making it difficult to make sound investment decisions. From mutual funds and ETFs to stocks and bonds, there are so many types of investment vehicles to choose from.
To give you a little insight as to the types of investment products you can choose from, I will describe a few below.
Mutual Funds: pooled collection of assets that invests in stocks, bonds, and other securities.
ETFs: Exchange Traded Funds are a collection of hundreds or thousands of stocks or bonds, managed in a single fund that trades on major stock exchanges, such as the NYSE and Nasdaq.
Stocks: allow you to invest in a specific Company (think, Apple or Meta).
Bonds: a less risky alternative to stocks, bonds are loans you make to a governmental entity or Corporation, and the governmental entity or Corporation agrees to repay you a fixed interest rate by a specified date or at bond maturity.
Money Markets: a fixed income mutual fund which invests only in highly liquid, short-term debt. Money market funds are considered very low risk.
If you are unsure of the type of investment product that will best work for you, contact your trusted CPA.
Don’t Let Financial Planning Scare You
Although anyone can build a financial plan on their own, sometimes it's best to enlist the help of an experienced CPA, to ensure your financial plan enables you to achieve your goals.
To help you on your journey to achieving financial freedom, we have created the 2026 AuditHer Life Monthly Savings Tracker! You can learn more about it here.