Solid financial planning can open many doors. It can mean owning a home, buying a car, taking that dream vacation, sending your children to the best schools, and enjoying a happy and fulfilling retirement down the road.

However, financial planning requires building a financial foundation, personal responsibility, and having the right tools at your disposal. If you’re just getting started, here are some helpful tips and tricks.

Financial Planning Starts With Choosing the Right Accounts

Your first step to a rock-solid financial foundation is choosing the right place to put your money after you earn it. Bank accounts are the obvious solution for several reasons:

• They hold and secure your money – No need to bury your cash in coffee cans.

• They insure your money – Actually, the Federal Government (FDIC) insures your money, but it must be held in a charted bank account. Insurance limits can vary, but usually up to 250,000 per account.

• They give you access to digital payment rails – This is especially important as most financial transactions today happen digitally. Examples would be via debit card, ACH, wire transfers, digital payments, etc.

• They assist in growing your credit – Having accounts in good standing is key to expanding your financial options down the road. The better your credit, the more trust financial institutions have in you. This means better interest rates and more capital with the need arises.

So, what kinds of accounts do you really need? For starters, you’ll want to have a checking and savings account— the checking to cover current expenses–and savings to provide a financial safety net in case of emergency. At most financial institutions, these two accounts are designed to work together to provide the best overall coverage and user experience.

When considering a checking and savings account (and which bank to open them with), you’ll want to look at:

• Interest rates – This is especially important with savings accounts, which usually offer higher interest rates than checking accounts, meaning more money in your pocket. Some checking accounts also offer competitive interest rates, though availability will vary greatly from bank to bank. Be sure to look closely – often times higher interest rates come with minimum balance or activity requirements before you can qualify.

• Cash back and rewards programs – Many checking and savings account programs offer rewards so you can get the most from the money you’re spending. Sometimes they come in the form of cash back which you can apply toward paying off a credit card or adding to your savings, or often, via discounts or rewards with certain vendors and businesses.

• Service and reputation – Not all banks are created equal, especially when it comes to customer service and experience. It is very important to do your research and pay attention to ratings and reviews when choosing a bank to do business with. If in-person service is important to you, be sure to research banks that have a branch nearby.

• Fees – Like any other business, banks need to turn a profit. One way they do this is by charging fees to use their premium services. Always ask for a full breakdown of fees before opening an account. These can range from maintenance and use fees to service fees for special requests and premium services like covering an overdraft or issuing a secure wire transfer.

• Online and Mobile Banking Apps – If you’re a digitally active consumer, you’ll want to pay special attention to the digital offerings of banks. The user experience of online banking apps can range from absolutely fantastic to downright pathetic. Be sure and request a demo of online and mobile banking portals, or read the reviews of other consumers to ensure your technology needs will be met sufficiently.

• Minimum balances and activity requirements – An account that offers a premium interest rate may require a minimum balance or certain level of monthly activity. The higher interest rate is the banks way of rewarding you for maintaining deposits and staying financially active. Pay very close attention because dropping below your minimums may cause you to miss out on interest earnings.

• Optimizing your Accounts - Now that you’ve settled on a checking and savings account, you can focus on how to get the most out of them. Here are some tips to get you started:

• Automate your savings – Saving for the future can be hard when you’re juggling all the expenses of daily living. To make saving easier—and to ensure you’re always working toward those financial goals—consider automating your savings. Have a portion of your paychecks directly deposited into your savings account, set up automatic transfers once a week, or utilize apps like Chime, Digit, and Acorns to handle the savings for you. Remember those digital payment rails I was talking about? They make saving a lot easier!

• Ensure your savings account covers accidental overdrafts – Most banks allow you to sync your savings account to your checking account to automatically cover any checking shortages that arise. Often times you have to request this functionality and it’s a very good idea. A checking overdraft fee can cost you between 20 & 40 depending on the bank.

• Setup Bill Pay for regular monthly payments – Stop stressing about paying bills on time. Online banking allows you to connect directly with many of the services you buy regularly, helping avoid late fees and service interruptions. Just make sure you keep enough money in your account and keep a calendar to know when they’re going to draft.

Investing In Your Future

Whether your goal is to send your kids to college, buy your dream home, or retire early—now is the time to set your financial plan in place. 

Here are some financial planning tips and tricks to get you started:

• Automate your savings – Saving for the future can be hard when you’re juggling all the expenses of daily living. To make saving  easier—and to ensure you’re always working toward those financial goals—consider automating your savings. Have a portion of your paychecks directly deposited into your savings account, set up automatic transfers once a week, or utilize apps like Chime, Digit, and Acorns to handle the savings for you. 
• Look into advanced investment options – A savings account is a great start, but if you want significant, long-term wealth, a more advanced strategy is critical. Enroll in your employer’s 401(k) and contribute the maximum match amount. Also ask your financial advisor about investing in an IRA, money market fund, or certificate of deposit. These can all help you build a healthy financial cushion for the future.
• Build up your credit – Your credit plays a huge role in your financial options. Good credit can help you finance your business goals, buy a house, and more. Make sure you’re safeguarding your credit by paying your bills on time, avoiding collections, and keeping your balances low. 

Not every investment option is right for every scenario. Consider speaking to a bank or financial advisor to help you determine which products are best for achieving your long-term goals.

Stay on Track

Getting your financial plan in order is only the first step. For true long-term success, you’ll need to keep your finances on track and working toward those goals at every turn.

This means:

• Creating a household budget – Set monthly budgets for individual household expenses. Make sure your entire family is on board and aware of your spending limitations.

• Tracking and monitoring your budget – Have real-time visibility into your budgets by using apps and digital tools to monitor your spending. Apps like Mint can even alert you as you approach your budget limits in a particular category.

• Reassessing your budget regularly – A budget isn’t a “set it and forget it” type of plan. It’s something that should change as your financial needs change, so set aside time each month to reevaluate, adjust, and rearrange according to your needs.

Like anything in life, your financial needs and goals will evolve over time. Make sure to reevaluate your goals and the steps you’re taking to reach those goals, on an annual basis. You may also want to consult a trusted financial expert for guidance, advice, and support along the way.

References:

1. How to Create a Family Budget, Step by Step (n.d.). Retrieved from https://www.mint.com/budgeting-3/how-to-create-a-budget-step-by-step

2. Amber Murakami-Fester (December 10, 2018). NerdWallet’s 4 Best Money Saving Apps. Retrieved from https://www.nerdwallet.com/blog/banking/best-money-saving-apps/

3. Eight Ways to Avoid Overdraft Fees (n.d.). Retrieved from https://www.aba.com/Consumers/Pages/AvoidOverdraftFees.aspx