Group of service members talking to advisor

How to Create a Financial Plan for Every Phase of Life

A financial plan evaluates your current financial state, sets goals for your future and makes a concrete plan for financial freedom. It helps you prepare for anything and gives you and your family a roadmap so that you can focus on the mission.

Assess Your Current and Future Needs

Think about your current income, expenses and debts and how those might change through each phase of life. Here's what you'll want to consider as part of your plan.

  • Determine what kind of debt you have. Is your debt "good debt" or "bad debt?" Knowing which is which can help you figure out what needs to be paid down first.
  • Never miss a payment. And always pay at least the minimum balance due each month.
  • Work on paying down one credit card at a time. Start with the one that has the highest interest rate.
  • Consolidate student loans. Combining your student loans into one loan can make it easier to manage the payments each month
  • Creating security for later. Think about what the future holds for you and your family, and ask yourself: What kind of financial cushion will we need to face life's milestones? Here are a few tips for saving for life's possibilities:
  • Building an emergency fund. Financial advisors usually recommend saving 3 to 6 months of living expenses in case of an emergency. If you're currently deployed, you may want to consider the Department of Defense Savings Deposit Program and earn 10 percent interest on your savings.
  • Saving for college. If you think paying for college for yourself or your children is in the future, you may want to look into different plans for financing a college education, such as a 529 plan.
  • Saving for retirement. Although it might be hard to imagine now, saving for retirement is one of the most important ways you can secure your financial future. Service members and federal employees can take advantage of the Thrift Savings Plan to grow their retirement funds. You can also look into opening a separate traditional or Roth IRA for your own personal account.
  • Investing for growth. You have many different investment choices if you want to grow your personal fortune. Understanding the relationship between risk and return is important before investing. You may want to explore your options with the help of a personal financial counselor.

Sticking to your new financial plan

Concerned about sticking to your financial plan? Try these strategies.

  • Make it automatic as much as possible. Automated savings drafts or credit card payments can help keep you on track for your goals.
  • Write it down. Putting your goals in writing can remind you what you're working toward when things get tough.
  • Find opportunities to save. Did your grandmother give you a big check for your birthday? Was your year-end bonus more than you expected? That's great — now use those opportunities to build your savings.
  • Be patient. Getting out of debt and saving money takes time. Don't expect major financial changes to happen overnight.

You can find plenty of resources to get you on the right financial track. Visit an installation Financial Readiness Manager on your installation, or check out Military OneSource's no-cost financial counselors to start managing your money more effectively today.