Cooking Up a Financial Plan: Must-Have Menu Items


This time of year, my mind regularly wanders to holiday dinners. I love everything about them -- crisp, fall weather, spending time with family, turkey, dressing, mashed potatoes, cranberry dressing, rolls, green beans, apple pie, pumpkin pie, pumpkin cheesecake, pecan pie. … Can you tell my favorite part?

My wife and I love to plan our menu. At our house, the foundation of our holiday dinners has always been turkey and mashed potatoes. Everything builds from there.

You can apply this "starting with the basics" principle when planning your finances. While building a solid financial foundation may not be as easy as roasting a turkey and mashing potatoes (well, I shouldn't say "easy" -- there was that disastrous year that I tried a slow cooker recipe), you can create a satisfying financial plan by starting with the basics and adding on few key side items. I'll even leave room for dessert!

Main Course: A Budget

"Spend less than you earn" is the golden rule of personal finance. Thankfully, tools like USAA® Money Manager and other technology and apps can ease the burden. Figure out where your money is going, where it should go, and then map out a plan to make a move to a better place. It all starts with tracking your current spending.

Side Item 1: An Emergency Fund

Are you prepared for a financial emergency? If an unexpected expense would cause you to borrow, sell stuff or break out your credit card, the answer is no. Set up an allotment or automatic transfer to your emergency savings account today.

Side Item 2: Insurance

Much like the complementary side dishes we try out at our turkey dinner, this is a moving target. The types and amounts change depending on where you are in life. This year, we are trying rhubarb ginger compote in lieu of cranberry sauce. With insurance, you might need to add umbrella liability coverage, replace Servicemembers Group Life Insurance if you're leaving the military, or just add additional life coverage to account for a new baby. Be sure that all your insurance coverage is on track.

Side Item 3: College Savings

Maybe you'd like to fund your children's 529 college savings account so they don't graduate with a massive amount of debt. Or you might have other ideas for imparting good financial habits, like matching money they stick in savings or subtly directing some of their earnings into a Roth IRA. Equally important: Spend a little time talking to your kids about good financial habits on a consistent basis.

Side Item 4: Save, Save, Save

There's typically a "good" reason or upcoming expense that keeps you from starting or boosting what you are putting away for emergencies, retirement or other financial goals. Regular savings habits are at the core of securing your financial future. We wouldn't leave turkey off our menu, and you shouldn't leave savings out of your routine.

Dessert: Fun Money

No matter how many helpings of turkey and mashed potatoes I've had, my holiday meal just isn't complete without a small (or not so small!) slice of pumpkin pie. The same goes with your financial plan. In moderation, a "fun money" account (think entertainment, restaurants or vacation) helps keep your budget on track by allowing you to avoid binge spending when you want to have a little fun.

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