October is Financial Planning Month: 8 Tips to Put You on the Road to Success

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By Matic

young couple sitting at table budgetting

October is Financial Planning Month, the ideal time to take a moment to assess your current finances and see where you can improve your bottom line. Here are eight steps that can help you up your financial wellness as we look ahead to the rest of 2024.

1. Create — or fine-tune — your budget

Most consumers are feeling the sting of inflation in essentials from housing costs to gas and groceries. If you don’t have a budget to refer to, now is the time to make one. It doesn’t have to be overly involved. One handy formula is the “50/30/20” budget, which divides your income into three categories:

50% is allocated to “needs,” like housing costs, insurance, utilities, food, and childcare
30% can be spent on “wants,” which are discretionary expenses like entertainment, clothing, and travel
20% is set aside for savings and addressing any debts.

2. Identify where you can make cuts

Once you have a budget in hand, you might notice you have more expenses than income. As you peruse the numbers, find places you can conserve or cut in order to keep your bank account healthy. Remember that even small changes, like canceling extra streaming subscriptions, can add up to big savings over time. For example, check your insurance premiums to ensure you’re not paying more than you need to for your coverage. (Matic makes it easy to shop around to see if you can score a better deal on your home and auto coverage.)

3. Set yourself up for savings.

Speaking of savings, don’t forget the adage to “pay yourself first.” That means starting a savings plan that will set you on the course for your future financial wellbeing. Not sure where to start? Most consumers find the easiest first step is contributing to their company’s 401(k) plan if offered. These plans offer tax savings by allowing you to fund it with before-tax dollars, which will then grow over time. Many organizations also offer a “match,” where they put in a percentage of every dollar you do, which makes it literally “free money.”

4. Build an emergency fund.

While plans like 401(k)s are designed for long-term savings, you also want to have short-term funds you can access for unexpected expenses, like a car repair or vet bill. Try to put aside a bit each month so you have about $500 ready for surprise bills you can cover them without dipping into retirement accounts (which will trigger penalties) or incurring credit card interest.

5. Avoid credit card debt

Paying credit card interest is always a waste of your hard-earned money, but it’s even more damaging in a rising rate environment like we have today. That’s because the cost of your credit card interest is rising, too, meaning you’ll owe more each month on your credit card balance. Credit cards can be a handy way to build your credit score — and even earn perks like cash back and purchase protection—but they are only useful if you pay them off in full each month.

6. Check your credit score

Yes, your credit score matters. With today’s uncertain economy, you want to be in the best possible position to borrow money should you need to. That means it’s imperative to have an excellent credit score. You can see how yours measures up at AnnualCreditReport.com. It’s free once a week through at least December 31, 2023. A high credit score means you’ll qualify for the best interest rate and terms when you do need to borrow money, such as for a mortgage or car loan and when you apply for insurance.

7. Make sure you’re protected with adequate insurance

Sufficient insurance can help safeguard your finances from a crisis, whether it’s a medical issue or a weather event. Now is a good time to familiarize yourself with your insurance policies to ensure you fully understand the monthly or annual premiums, deductibles, and payouts. Here are the types you should have for peace of mind:

Health insurance: Medical coverage is necessary to make sure you have access to both routine wellness checkups and care if you’re sick or injured.
Long-term and short-term disability insurance: These types of insurance replace part of your income if you are unable to work because of a physical or mental health condition.
Life insurance: This can help protect your family’s short- and long-term finances in the event of a tragedy.
Homeowners insurance: Anyone with a home mortgage is required to have hazard insurance to protect the structure. Homeowners insurance meets this requirement and also provides personal property and liability coverage. . Consider whether you need additional coverage for natural disasters or to cover particularly pricy possessions.
Auto insurance: Car accidents or theft can happen to anyone, so make sure you’re protected.
Pet insurance: Have a furry friend? Vet bills and medication can add up, and pet insurance can help keep this valued family member healthy and happy.

8. Evaluate your insurance policies regularly

A key step in financial planning is reviewing your plans to see if your current insurance has the features and benefits you need at the lowest possible price. However, you also want to make sure you’re working with a reputable company that will be responsive and ensure you receive the benefits you’re paying for.