Top 5 Wealth Building Financial Planning Strategies

Let’s start this article off with a bit of truth. When it comes to your life and your finances, having financial planning strategies is something you don’t want to mess up! The unfortunate truth about life is that you only have one chance at it, especially when it comes to your finances.

The reality is quite bleak. The majority of Americans struggle with wealth building. Because of this, most reach retirement age with very little saved up. That’s no way to live your golden years!

The truth is, to build a strong and solid foundation, we all need to figure out our own financial planning strategies early on. The game of wealth is a marathon, not a sprint. It takes years to build wealth, so it’s important to start as early as possible. In this article we’ll go over the top five wealth-building financial planning strategies that everyone can and should implement in their financial life.

Strategy 1: Have a budget

Before you scroll to the next strategy, take a second to actually read this paragraph. I am sure that this is not news to you. I bet you have come across hundreds of articles telling you that you need a budget.

You are probably thinking, “oh, I know this one. Tell me something that I don’t know.” Many people reading this article will most likely have that thought, but do you actually have a budget?

If not, it’s absolutely time that you start one! I know, it’s not as fun and exciting as if I told you to go invest in stocks or something. However, something as basic as having a budget can be the difference between retiring a millionaire or broke. This is one of the strongest pillars when it comes to your financial planning strategies. If you want a dead-simple starting point, the 50/30/20 rule splits your take-home pay into needs, wants, and savings — and the free money dashboard keeps it all in one private place so you actually stick with it.

I know, this all probably sounds a bit exaggerated, but it’s unfortunately the sad truth. The reason why so many struggle with credit card debt is that people are basically spending money they don’t have. Having a budget controls that spending because you know exactly how much you can spend in any given month.

Strategy 2: Have an emergency fund

This neatly brings us to our second strategy. Having an emergency fund is absolutely critical when it comes to building wealth in your lifetime.

Did you know that roughly 40% of Americans would struggle to cover a sudden $400 expense? That’s a staggering amount — almost one in every two people in the entire country.

When emergency situations arise, it’s better to be prepared than to start scrounging around for change or reaching for a credit card. You have no control over your car breaking down, an emergency hospital bill, or unexpectedly losing your job.

To make sure you have ample protection against any unexpected emergency, save three to six months’ worth of expenses — the emergency fund calculator shows your exact target in seconds. And don’t let that money sit in a zero-interest account losing ground to inflation; the where-to-park-cash tool compares high-yield savings, I-Bonds, and T-bills so your safety net actually earns something. Building an emergency fund takes time, so you’d better start now. It’s better late than never!

Strategy 3: Pay off your debts

The number one killer of wealth is debt. From now on, I want you to see it as an absolute threat to your existence, your future, and your life! Definitely remember this as one of the most important financial planning strategies on this list.

There are very few instances in life where debt can be justified. Honestly, the only debt you should ever have is a mortgage. Anything else needs to be paid off as soon as possible!

If you really want to get ahead in life, you need to stop telling yourself that debt is good. The problem with debt is that all you see is a monthly payment. I mean, what’s $100 here, $400 there per month? Doesn’t seem like much, until you actually do the math.

When you take into account the interest rate and the years it takes to pay off that brand-new TV or cell phone, you realize you could have been investing that money instead. I know, I sound so cliché right now, but debt needs to be eradicated from your life. If you’ve got a car loan, the car payment calculator and the debt-to-income calculator will show you exactly how much those payments are really costing you — and where you stand.

If you have a car payment, phone payment, or even payments on your clothes right now, imagine the relief and freedom you’d have without them. What would you do with that extra five to six hundred dollars a month? A lot, I’m sure!

Strategy 4: Know your credit score

Did you know that it is very expensive to be financially irresponsible? When you recklessly rack up credit card debt and miss payments here and there, it completely ruins your credit score.

Knowing your credit score is a fantastic financial strategy that very few people take advantage of. A credit score is like a report card from school. It tells you where you’re doing well and where you’re falling short.

How can you expect to improve something if you don’t know something is wrong with it? That’s where knowing your credit score comes in.

When you have a high credit score, you get to enjoy the lowest interest rates and keep more money in your pocket. I will always tell you to avoid getting a credit card balance or a car payment, but if you already have those, boosting your credit score can make them that much more affordable and easier to pay off faster. So make sure you know and keep track of your credit score. This will help you in the long run, trust me.

Strategy 5: Have a written plan

I have saved the best for last! Here’s a phrase worth tattooing on your brain: what gets measured gets improved.

With anything in life, if you want to improve it, you have to keep track of it. It’s like trying to reach a destination without a map. How do you know you’re not going around in circles? If you’re not keeping track of it, you’ll never know.

That same rule applies to your financial goals. You have to keep track of them, measure them, and work toward improving them. Always have a written plan for your finances and revisit it often. Put a real number on each goal with the savings-goal calculator, then watch your net worth, holdings, and budget move in one place on the dashboard — that’s “what gets measured gets improved,” made automatic.

The majority of people out there just live life without any sort of target. You must have a clear objective of what you want. You must also have a clear time frame for achieving these objectives, and very clear, specific steps to get there.

There is power in keeping track of your goals and actually writing them down. If you really want to achieve success in your life and finances, it is absolutely paramount that you write your goals down. Don’t just coast through your life — have a plan, a written plan!

Final thoughts

As my father always told me, “Life is very individual.” There is no such thing as a perfect financial planning strategy that works for every single person. That’s because every person’s life is different.

Investing and reaching your financial goals is both an art and a science. There’s an element of creativity, and there’s also an element of calculated risk.

Always remember that, like any other strategy in life, this one must be flexible and evolve with time. But at the end of the day, it should closely resemble the top five I’ve listed above.

If I can do it, you can too! :) Happy strategizing!