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How to establish your first financial plan

Setting up a plan is an essential step in taking control of your finances. Read on to learn the simple steps to establishing your financial plan.

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You don't have to be a financial wizard to master your financial future.

One of the most basic steps to gaining control of your finances is to create a financial plan. It helps you identify your goals and map out how you'll achieve them.

Here are some tips for getting yours underway today.

Simple works just fine.

Your plan doesn't need to be complicated. The basics of financial planning include budgeting, insurance, paying down debt and saving for retirement. Planning can be as simple as figuring out how to manage your paycheck on a month-to-month basis and putting away enough money to set up an emergency fund.

Basic accounts of a financial plan.

Your financial life will be supported by several accounts that enable you to manage your day-to-day and future lives. Here are some of the basics each person will find useful.

Checking account

A checking account is where you will manage your day-to-day finances. Your employer income could be deposited here, and this is where the majority of your expenses will be paid from. Keeping this in order will be critical to helping you stick to your budget.

Savings account

You will find a savings account very useful. This is where you will store your emergency fund and will probably set up separate accounts for your unique goals like a home down payment or a vacation. Keeping the money separated helps you maintain it for the intended purpose. This is important so that you don’t accidentally spend some or all of your emergency fund on your Hawaiian vacation. This is one danger when all your funds are comingled together.

If your financial institution allows, you might not need different accounts for each goal. Instead, you can set up a bucket or envelope method within one account in order to track allocations to different goals.

Credit Card

A credit card can be a handy tool to help you manage your finances but can also be detrimental if not used properly. With a credit card, you can earn cash back, earn points that can be redeemed for travel, account credit, cash back and more, and also receive extended warranties on purchases or even travel insurance. Plus, a credit card can help reduce your risk of fraud through items like USAA's zero liability‍ ‍ See note 1 for unauthorized transactions.

But, when used improperly, credit cards can lead to excessive spending, which leads to debt. Read this article to learn more about the dangers of credit card debt.

Retirement accounts

One last basic account that is part of many people’s financial life is a retirement account. Often, people start saving for retirement through an employer’s 401(k) or TSP. Then they may venture out to an individual account like a Roth or traditional IRA.

Establish goals.

One main step is to take time to figure out your goals so you have something to motivate you. It's critical that you're working toward something and have benchmarks along the way to stay on track.

Be open to change.

Realize financial plans can — and must — adapt as your circumstances change. For example, children dramatically transform your financial reality, from the cost of raising them to saving for college. Be ready to reassess goals as your family, job and health demand.

You don't need a pro.

You don't have to work with a financial professional to get started. Take advantage of online planners and calculators to create a plan. These tools can help you set and reach a variety of goals, such as setting up an emergency fund or saving for retirement.

USAA has one such tool that many people find useful as it’s specifically designed to help you take control of your financial life. We look at what you’re doing well and what you may be able to improve upon and then give you a personalized plan. USAA members can click here to learn more about your action plan.

And, while you can be very effective doing this yourself, a professional can be helpful at times, so don’t be afraid to seek financial planning support. But before you take this step, consider these 5 questions to ask a financial advisor before hiring them.

Don't forget insurance.

A financial plan should take insurance into account. Renters insurance, health insurance, life insurance — these policies exist to protect you and your loved ones from potentially disastrous financial losses. But the right amount of insurance varies, depending on your situation. As your financial situation changes, reevaluate your insurance policies to make sure you're adequately covered.

Start with a plan. Creating a blueprint for your goals helps you achieve long-term success. First, set your goals and priorities. List your short-and long-term financial goals and insurance needs. Second, gather your current financial information. USAA’s personal budgeting tools can collect data from USAA and non-USAA accounts, giving you a realistic look at your income, expenses, assets and liabilities. Get started by creating your budget at usaa.com/howtobudget. Short-term goals may include: Paying off debt. Starting an emergency fund. Buying a new car. Long-term goals may include: Buying a home. Early retirement. Protection goals may include: Getting auto and health insurance. Car payment. Renters/Mortgage insurance. College loan. Third, evaluate your situation and determine next steps. Using USAA’s Financial Readiness tool, you can get a personalized action plan customized to your life stage and goals. Visit usaa.com/my/financial-wellness to view your action plan. Increase emergency fund. Pay down debt. Start saving for retirement. Investments. Emergency Fund. Retirement. Fourth, take action. Set your plan in motion. Whether  it calls for a savings plan to cover unexpected expenses or to repay debt, you have the blueprint to  get started. Fifth, review your plan annually. Track your progress throughout the year and update your plan with major events as needed. Got married. Bought a house. Had a child.

Money Management

Begin your financial plan with USAA’s personal budgeting tools.