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Financial Plan for the Future

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Why You Must Have a Business Plan

It’s more than a tool for getting funding. Think of it as the road map to your business’s future.
Stever Robbins

Recently someone asked me why they needed a business plan if they were getting all the funding they needed from friends and relatives. It sounded to me as if they were thinking of a business plan as just a fund-raising tool. In fact, a business plan is much more than that: It’s a tool for understanding how your business is put together. You can use it to monitor progress, hold yourself accountable and control the business’s fate. And of course, it’s a sales and recruiting tool for courting key employees or future investors.

Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. You’ll end up spotting connections you otherwise would have missed. For example, if your marketing plan projects 10,000 customers by year two and your staffing plan provides for two salespeople, that forces you to ask: How can two salespeople generate 10,000 customers? The answer might lead you to conclude that forming partnerships, targeting distributors and concentrating on bulk sales to large companies would be your best tactics.

As part of your operational plan, you’ll lay out major marketing and operational milestones. When you’re the founder, the only person holding you accountable to those results on a daily basis is you. So your plan becomes a baseline for monitoring your progress. If your prototype was to be complete by February 1, and it gets done early-on January 10, for example-you can ask yourself why. Was there an unexpected breakthrough? Did someone put in a heroic effort? Or did you just overestimate? What you learn will help you do an even better job next time.

But even more than a tool for after-the-fact learning, a plan is how you drive the future. When you write, “We expect 100 customers by the end of year one,” it’s not a passive prediction-you don’t just wait for the customers to show up. It becomes your sales force’s goal. The plan lays out targets in all major areas: sales, expense items, hiring positions and financing goals. Once laid out, the targets become performance goals.

And of course, a well-written plan is great for attracting talent. When a prospect asks to understand your business, you can hand them a plan that gives them an entire overview. Their reactions tell you something about how quickly and thoroughly they can think through your business’s key issues. Plus, the written record of your goals coupled with a track record of delivering against those goals sends a message loud and clear: You understand your business and can deliver the results you promise. Great employees will respond to that message-as will banks and investors the next time you need to raise money.

So viewing your plan as a fund-raising tool is just the beginning of the story. You’ll use the plan for so much more-for managing yourself, for operating the business and for recruiting. Before deciding to skip your planning phase, consider all the implications and what they mean for your future success.

Stever Robbins is a venture coach, helping entrepreneurs and early-stage companies develop the attitudes, skills and capabilities needed to succeed. He brings to bear skills as an entrepreneur, teacher and technologist in helping others create successful ventures.

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Finance Your Franchise

This is it. You’re ready to begin your franchise dream. Only one thing is left: Finding the money you need.
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You’ve read the literature, done your due diligence, considered the statistics on success, and know a franchise is the way you want to get into business.

But before you sign on the dotted line, answer this question first: Where will you get the money to finance the franchise, royalty fees, inventory and working capital?

The first thing you want to do before approaching any lender is determine what your net worth is. To do this, use a personal balance sheet to list both your assets (what you own) and liabilities (what you owe). Under assets, list all your holdings–cash on hand, checking accounts, savings accounts, real estate (current market value), automobiles (whether paid off or not), bonds, securities, insurance cash values and other assets–then total them up.

The second part of the balance sheet is liabilities. Follow the same steps. List your current bills, all your charges, your home mortgage, auto loans, finance company loans and so on. Subtract your liabilities from your assets. Once you’ve worked up this sheet, take a good look at your credit rating. There are three common ingredients that all potential lenders look for in a credit rating: stability, income and track record.

Most lenders are interested in how long you’ve been at a certain job or lived in the same location, and whether you have a record of finishing what you start. If your past record doesn’t show a history of stability, then be prepared with good explanations. Not only is the amount of income you earn important but so is your ability to live within that income. Some people earn $100,000 a year and still can’t pay their debts, while others budget nicely on $20,000 a year.

Most lending institutions look at your income and the way you live within that income for one very good reason. If you can’t manage personal finances, the odds against you being able to manage your business finances are very good.

The third element lenders look for is your track record–how successful you’ve been in paying off past obligations. If you have a record of delinquent payments, repossessions and so on, you should get these squared away before asking for a loan.

Most lenders will contact a credit bureau to look at your credit file. We suggest you do the same thing before you try to borrow. Under the law, credit bureaus are required to give you all the information they have on file about your credit history. Once you have this tool, you should correct any wrong information or at least make sure your side of the story is on record. For instance, a 90-day delinquency would look bad, but if that 90-day delinquency was caused by being laid off or by illness, then that should be taken into consideration.

Business Plan

After you’ve determined your net worth and your credit rating, the final step to take before approaching lenders is putting together your business plan.

A well-thought-out business plan can make the difference between having your loan application accepted or rejected. A complete business plan should always include an intimate, technical study of the business you plan to go into; accurate pro formas, projections and cost analyses; estimates of working capital; an indication of your “people skills”; and a suitable marketing plan. It should also include certified statements of your net worth and several credit references.

Financing From the Franchisor

Traditionally, the first place franchisees turn for financing is the franchisor. Almost all U.S. franchisors provide debt financing only. Some carry the entire loan or a fraction thereof through their own finance company. We found fractions of 15 percent, 20 percent and 25 percent, all the way up to 75 percent of the total debt burden. The franchisors we talked to emphasized that these figures are simply guidelines and not hard and fast limits.

In addition, the loans made by the franchisor can be structured a number of ways. Some offer loans based on simple interest, no principal, and a balloon payment that’s due five or 10 years down the road. Others offer loans with no payment due until after the first year.

Instead of financing the entire start-up cost, franchisors may offer financing for portions of the entire cost. They may have financing plans for equipment, the franchise fee, operational costs or any combination thereof.

In addition to financing a portion of the start-up cost, the franchisor usually has made arrangements with leasing companies to lease the franchisee the equipment necessary to run the franchise. This can be a significant part of the financing, since equipment often makes up between 25 and 75 percent of a franchise’s total start-up costs.

If the franchise you’re considering doesn’t offer equipment leasing, look into nonfranchise, nonbank companies that specialize in equipment leasing for franchises. These types of financing companies will often provide asset-based lending to finance franchisees’ furniture, equipment, signs and fixtures, and will allow franchisees to purchase the equipment at the end of the lease. Keep in mind that you may lose some tax advantages under the current law if you lease that equipment.

Remember that a business is franchised for two reasons: to expand the business and to raise capital. So if you have a reasonably good credit record and pass all the financial requirements, most franchisors will bend over backwards to get you on the team. The help that franchisors provide to help you get financing usually includes assistance with business plans and introductions to lending sources. In many cases, franchisors serve as guarantors of loans you take out.

Other Sources of Financing

After you’ve determined the extent of financing available from the franchisor, make a working list of all other available sources of capital. Most sharp operators use the following sequence of contacts: friends and relatives, home mortgages, veterans’ loans, bank loans, SBA loans and finance companies.

Often, banks that aren’t willing to work with you based on your financial profile become more amenable if you suggest working with an SBA loan guarantee; these loans are guaranteed up to 90 percent by the SBA. Small businesses simply submit a loan application to the lender for initial review, and if the lender finds the application acceptable, it forwards the application and its credit analysis to the nearest SBA office. After SBA approval, the lender closes the loan and disburses the funds; the borrower makes loan payments to the lender.

Some franchisors report being approached by financial brokers–historically more interested in big deals–to put together large pools of money using SBA and private funds. These funds would be available to franchisees through the franchisors like a trust fund. Groups of smaller banks with funds to invest would contribute to the fund from all over the country.

Other options would be to take out a home-equity line of credit or a second mortgage on your home. Be careful when utilizing this type of financing, however. The home-equity line of credit and a second mortgage are secured by your home. If you can’t repay the amount you finance using this source, you risk losing your home.

You can also use assets such as stocks, bonds, and mutual funds to secure a loan as long as they’re not part of a qualified plan like an IRA profit-sharing plan. Also, if you are over age 59 and have a lot of money tied up in an IRA, you could use it for part of your financing requirements. Although you’ll have to pay taxes on the amount used, not to mention suffer the loss of income from interest, it can be a good financing tool.

If you are under age 59 and your IRA is one of your largest assets, you still may be able to take advantage of this avenue without accruing the 10-percent penalty associated with early withdrawal. By taking Substantial Equal Periodic Payments spread over a minimum of five years, based on your life expectancy, and a set of annuity tables published by the IRS, you can eliminate the 10-percent penalty, although the money is still taxable.

Tips to Consider

There are infinite sources of financing available to help you launch the franchise of your dreams. However, operating a franchise with no reserves and blinding yourself to unexpected business problems can lead to disaster. A good rule to remember: Never invest more than 75 percent of your cash reserves. If you have $10,000, invest $7,500. If you have $25,000, invest $18,750.

More important, remember that the price of a franchise doesn’t always reflect the actual cost of the business itself. Additional costs can include down payments on the land, building, equipment, fixtures and signs, and can cover inventory, leasehold improvements, training, opening promotional costs, administrative costs and even sales commissions.

Be sure you understand the requirements of your cash investment. You will need a “pillow” of working capital to properly guide the business through its ups and downs. If you do your homework thoroughly, and remember that financing a business is the most important sale you’ll ever make, then you’ll be head and shoulders above the competition.

15 Fast Franchise Financing Tips

1. Talk to your franchisor before searching for outside financing; get approved or pre-qualified.

2. The most common source of start-up capital is friends and family. Use them.

3. Seek out lenders that understand not just small business but franchising as well.

4. Be totally honest and upfront with lenders. Hide nothing. Be prepared to explain everything.

5. Neatness counts. Fill out your credit and loan applications clearly. Typed is better.

6. Don’t weigh down your loan application with attached documents.

7. Don’t exhaust your liquidity by paying off outstanding debts before filing a loan application. Lenders want you to have capital available.

8. If you lack liquidity, find a partner with money.

9. Consider equipment leasing to conserve start-up capital and improve the appearance of your balance sheet.

10. Keep debts and expenses to a minimum. Many business owners take on too much debt, forgetting that cash flow must pay that debt.

11. Consider buying used equipment, furniture, vehicles, etc.

12. Let your fingers do the walking on the Internet before wasting time, energy, gas and phone calls. You’ll find useful information. Some sites even allow you to file loan applications online.

13. Don’t overlook angel investors and venture capitalists.

14. Avoid dipping into your retirement money or your kids’ college funds. Any startup-even a franchise-is a risk.

15. Don’t give up.

“Life is what happens when you’re busy making other plans.” …and sometimes things get out of control. A bad credit rating can be gut-wrenching and humiliating as well as just plain bad news. Contact durhamregionmortgages.com at your earliest convenience. Whether you’ve had a bankruptcy or your credit is only slightly bruised, you can obtain financing.

What is a Day Trader?

In finance, a day trader is someone who buys and sells financial instruments such as stocks, options, futures, derivatives, and currencies. A broker, who simply fills out the orders that are asked for, whether buying or selling is not a trader, the broker is there to simply execute any orders that a trader or an investor has requested. A trader is a professional who works either in a financial institution or on his or her own.

What is a day trader?

In institutions, the remuneration for traders tends to be high when compared to other professions, because of the bonuses they charge at the end of the year, which are according to what they have earned for the institution. The key difference that exists between an investor and a trader is the length for which a person maintains their asset. Stakeholders usually have longer-term goals over time, while traders will hold assets in the short-term to exploit short-term trends.

Understanding the field

If the trader operates in a one-day time frame it is called an intraday trader or day trader. A day trader buys and sells financial instruments traded on the stock exchanges around the world and does so on the same day they are traded so that all positions will be closed before the market closes on the trading day. Therefore, he or she does not maintain any assets during the night.

The day trader usually makes around 25 to 250 stock trades in one day. There are also swing traders, whose operations are less frequent, and can last from a couple of days to a few months. To learn more about this, go to Rockwell Trading on Facebook.

Day trading is the future

Until a few years ago, most day traders were institutional traders. However, the rise of technology in the second half of the 1990s has provided the market with various advancements in information technology and communications. This accessibility has led to online trading having easy access to powerful analytical tools.

In addition, the low and accessible commissions of brokers have also helped people make money performing trades with the possibility of success for many and the achievable reality for even more individuals.

Techniques For Employing Online Payday Loans In Your Favor

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Are you hoping to get a payday loan? Join the audience. Many of those who definitely are doing work have already been acquiring these lending options these days, to get by till their following salary. But do you actually know what payday cash loans are typical about? In this post, you will see about payday cash loans. You may even learn items you never understood!

Use payday loans exclusively for money emergency situations. One of the great things about a payday advance is it allows you to stay self-enough and handle your personal budget in private. If you had to acquire the money from household or friends, then you should disclose your finances, which many individuals want to continue to keep to on their own.

When you are thinking about a payday loan, take into account having a cash loan on your own credit card instead. Whether or not the interest on your charge card is higher above 25Percent it can be nevertheless cheaper than the interest rate on payday loan. Using a cost of 15% on the two-7 days loan, which can be quite common, the twelve-monthly interest rate tops 400Percent.

Whenever you obtain a payday loan, ensure that you pertain to a single financial institution as opposed to numerous versions. You raise the possibility that your particular app can get rejected if you pertain to many different creditors simultaneously as it can be viewed as irresponsible through the loan providers.

Make certain you go through every one of the fine print, before you apply to get a payday loan. Lots of people get used up by pay day loan firms, because they did not study all the details before you sign. If you do not fully grasp every one of the terminology, ask a family member who knows the material to assist you.

When you are applying for a payday advance on the internet, make sure that you get in touch with and speak with a realtor well before going into any information to the site. Numerous crooks make-believe to be payday loan agencies to acquire your hard earned dollars, so you should make certain you can attain an actual particular person.

The best recommendation you can find about payday cash loans is basically that you should not use that type of bank loan except when absolutely necessary. It can be not too difficult to have a payday loan just by signing your own name, but some unexpected scenario may arise in order to pay it off that will create a far more hard situation.

One never knows who may be on the other side from the personal computer, so you must be careful when getting a payday advance. Try to find information and facts on the site which can be used to get hold of the lender. If they can not be attained, you must not believe in the company in any way.

Individuals searching to get a payday advance can be a good idea to take advantage of the competitive marketplace that is present in between loan companies. There are plenty of diverse creditors available that some will attempt to provide you with better deals as a way to attract more organization. Try to get these gives out.

Try to look for a payday advance business that offers loans to people with a low credit score. These personal loans are based on your work condition, and ability to repay the loan as opposed to relying upon your credit rating. Acquiring this kind of cash advance can also help one to re-construct very good credit. When you abide by the relation to the deal, and pay it again promptly.

If you have any beneficial things, you might like to consider taking them with you to definitely a cash advance company. Occasionally, payday advance companies allows you to secure a payday loan in opposition to an important product, for instance a piece of great expensive jewelry. A attached cash advance will most likely have got a reduce interest, than an unprotected payday loan.

Do not obtain a personal loan for just about any more than you can pay for to repay on your next pay out time. This is a good strategy to enable you to pay out your loan back in whole. You do not wish to spend in installments for the reason that curiosity is so great that this will make you owe a lot more than you obtained.

After reading this informative article, with a little luck you will be will no longer at night and also have a better understanding about pay day loans and exactly how one can use them. Online payday loans enable you to use cash in a shorter amount of time with few constraints. When investing in completely ready to get a payday advance when you purchase, bear in mind every thing you’ve go through.

Three of the Top Items a Consultant Will Evaluate During a Company Evaluation

The majority of entrepreneurs go into business because they have a passion for something, not because they have what it takes to run a business. The passion they have may be what is needed to get a company off the ground, but a lack of industry knowledge can quickly stifle growth. Many business owners turn to a professional consultant when they feel stuck in a rut, as they can provide a much needed third party perspective that can identify challenges and opportunities for improvement. Though they will look at the entire business, most of their efforts will focus on these core areas.

Staffing Patterns

A company’s most expensive line item is the cost of their staff. While it is necessary to have the workforce needed to run a business, many companies do not tackle this area of growth with forethought. A consultant will create benchmarks that can be used as indicators to add additional staff and help set quota requirements for existing employees. This will assist in ensuring that employees are paying for the cost of their labor, and help increase production without adding additional overhead.

Product Costs

In addition to examining the cost of the raw materials needed to produce an item, a consultant will also make sure that final product prices reflect the current market, and help design a timeline for increasing prices. This will prevent an item from being under or over valued, and allow a company to remain competitive with others in the same industry. Slight pricing adjustments can increase sales and a company’s bottom line.

Advertising Methods

Utilizing the proper advertising channels is crucial to the success of an organization. It is imperative that ads reach the intended audience, and that money spent on advertising is invested wisely. Online advertising is an attractive option, and a consultant can help with proper placement and find low-cost alternatives that convert page views into sales.

A business owner should never be embarrassed when asking for help. Tapping into the knowledge of a consultant like Nick Bova can identify areas of weakness and help a business owner get back to what they love most about their company. Mr. Bova’s online profile has an overview of his experience. Be sure to view it at au.linkedin.com/in/nick-bova-b9167662 to learn more and arrange a phone consultation.

Saving $100 Now Is Better Than Saving $1,000 In 10 Years

“Someone’s sitting in the shade today because someone planted a tree a long time ago” is one of the most famous pieces of financial advice from Warren Buffett. Out of fear for current conditions of the stock market or a misguided belief that small amounts do not make a difference, few people take Buffett’s advice as seriously as they should. Review why it is better to start saving right now, even at a small rate, rather than just trying to catch up later on in life.

Power of Interest Compounding

The present time is always the best time to start investing and saving. Saving $100 now is better than saving $1,000 in 10 years because you are able to earn interest on every one of those 10 years. Consider the following scenarios:

If you were to deposit $100 every year for 10 years in a high-yield savings account with a 1.05% annual interest rate, you would have $1,054.55 at the end of the 10-year period. Some high-yield savings accounts require no minimum deposit, have no monthly maintenance or annual fees, and provide a boost to your interest rate if you make no withdrawals and you make deposits each month for a number of consecutive months. Such features increase your total investment at the end of the 10-year period.

If you were to make the same series of deposits for 10 years in an investment account paying an annual return of 4.5%, you would have $1,258.57 at the end of the 10-year period. The higher the interest rate, the better the payoff of investing $100 every year.

However, it is still possible to do even better. The historical average annual return for the S&P 500, adjusted for inflation, is around 7%. If you were to invest $100 every year in an index fund that mirrors the S&P 500 through your retirement account, you would have $1,433.48 at the end of the 10-year period.

Effect of Inflation

Inflation is another reason why you need to start investing now. Measured in terms of the Consumer Price Index (CPI), inflation chips away at the actual value of your money. Every year, retailers, business owners and just about everybody else raises prices of goods and services to account for higher costs. For example, assuming 2% inflation, if you were to leave $1,000 in a checking account that gains no interest, your deposit would be worth $903.92 in five years and $817.07 in 10 years. To maximize your purchasing power in the future, you need to start investing now.

List of Benefits From Retirement Accounts

Investing in retirement accounts, including 401(k)s and traditional IRAs, allows you to boost your investment by deferring applicable income taxes until retirement, when you are more likely to be in a lower tax bracket.

By contributing to your retirement account on a pretax basis every year, you effectively reduce your taxable income. For example, if you were to contribute $100 out of your $2,000 bi-weekly paycheck to an employer-sponsored 401(k), you would only pay federal income taxes on $1,900. When you are close to the upper limit of your tax bracket, contributing to a retirement account prevents you from paying more taxes.

Another benefit of contributing to a retirement account now instead of in 10 years is you are taking advantage of your annual contribution limit. In 2015 and 2016, you could contribute up to $18,000, or $24,000 if age 50 and over, to your 401(k) plan each year. If you do not contribute at least $100 each year, that chance is gone forever. And so are the potential returns that could have accumulated until you retire.

The Bottom Line

It is better to start saving now, even at a small rate, than just trying to catch up later. Even an annual contribution of $100 to your savings account, investment account or retirement account improves your odds of reaching your investment goals.

Top 4 Things to Do Before Retiring

Top 4 Things to Do Before Retiring

What are you supposed to do when you turn age 65, or perhaps even age 62? You’re supposed to retire. Age 62 is the magical year where you can collect early Social Security benefits. And age 65 used to be the age when you could collect full retirement benefits, although for those retiring now, it’s age 66. I’ll admit that getting money from Social Security when you’ve been giving money to it for so long is quite enticing. Insurance and investment companies add to this appeal by portraying retirement as lounging on the beach all day long sipping your favorite beverage.

But retirement is not always what it seems. In his book, The New Retirementality, Mitch Anthony cites an American Demographics poll. According to its research, 41% of retirees found retirement to be a difficult adjustment. In comparison, just 12% of newlyweds found marriage to be a difficult adjustment, and 23% of parents found parenting to be difficult. That’s pretty astonishing when you think about it.

A lack of purpose, lack of social stimulation, boredom, and financial constraints are just some of the reasons why retirees can find retirement a difficult adjustment. As with anything in life, proper thought and planning can make the transition much easier. So before you hand in your final notice and ride off into the sunset, you may want to do these four things.

Ask Yourself: ‘Why Am I Retiring?’

Is it health issues, stress, or long hours? Do you have an irritating boss or co-workers? Do you find your work lacks fulfillment? You need to focus on exactly why you want to leave the workforce. Perhaps you’ll discover that you actually don’t. Instead, you just need to cut back on hours or responsibilities. Or, perhaps you need to choose a new career path or start your own business.

I recently had a client who retired. She had been working in the same career for 30 years and just didn’t find it fulfilling any longer. She didn’t want to stop working; she just wanted to have a job where she could really help people. She is now working part-time as a health aide and loving it.

Get a Grasp on Your Financial Situation

Do you know how much income you need to live on? If you don’t, don’t stress, you definitely aren’t alone. One way to find out is to track your expenses. Quicken or an Excel worksheet can come in handy with this. The other way is what I call top-down budgeting. You start by taking your household gross income and subtracting Social Security and Medicare taxes, income taxes, savings, and anything else that won’t be an expense during retirement, such as employer-provided health insurance. You then add back in any health insurance expenses and premiums including Medicare Part B you will incur upon retiring. You also need to come up with an estimate of what your income tax liability will be in retirement as well. If you can’t calculate that yourself, your tax advisor or financial planner can do it for you.

The resulting figure is what you need to live on in retirement. From this, you’ll subtract the income you’ll receive from Social Security and any pensions. Any shortfall will need to be made up from investments or earned income.

Plan Your Retirement Lifestyle

What do you want to do in retirement? If you’re like me, your mind immediately goes to the activity that you love the most. Perhaps it’s golf, or reading, or playing with grandkids. But, do you want to spend all day every day just doing that? Mitch Anthony encourages people to come up with an ideal week in retirement. Ask yourself what you want to do each morning, afternoon, and evening in a typical week. A well-rounded schedule will certainly include time for relaxation and enjoyment, but may also include time for mental, physical, and spiritual improvement. Helping family, friends, and the community can bring a sense of fulfillment and meaning that many miss after they quit working.

Do a Trial Run

Finally, do a trial run. You wouldn’t buy a car without a test drive, why would you embark on your retirement journey without doing the same thing? Take a month or two off and model it after your ideal retirement week. You’ll probably love it – for the most part. But, you might discover that there are things you need a little more time to prepare for. For example, many people I have talked to didn’t anticipate how much traveling they would do. I’m not talking about trips around the world; I’m talking about trips to the other side of town. This impacts their gas and vehicle budgets. A trial run can help you spot these things sooner.

It might sound like I’m trying to talk you out of retiring – I’m not. Just about every retiree I’ve ever met loves it. But, as crazy as it sounds, retirees today may spend almost as much time in retirement as they did working. You owe it to yourself to go into it prepared.

10 Ways to Effectively Save for the Future

It is much easier and more enjoyable to take the income, the money we have earned and worked hard to receive, and spend all of it every month, purchase whatever we want and not think about the future. The future, for some people, is so far away that we think that it is not necessary to think about it. But in reality, there is no better time to think about it than now.

As a CNN Money article suggests, when it comes to money, we just aren’t doing it enough. A majority of people in the U.S. are saving from nothing to 5% of their income, when it is suggested you save 15% each month. Why? There are many reasons to save.

Savings Goals

Between today and the conclusion of our income-earning days, a lot can and will happen. We might lose our job(s), take a pay increase or decrease, move or become disabled and unable to work. Strategizing about the income we make now to make plans for the future is one of the best things we can do with our hard-earned money.

The future doesn’t just have to be retirement – the future is tomorrow. It is allowing a break from the paycheck-to-paycheck cycle or allowing for a big purchase down the road, like a vehicle, vacation or house. Living paycheck-to-paycheck cycle, surprisingly, isn’t just something that happens to those earning lower incomes, but to anyone unable to create a budget and follow it, and to make savings goals and reach them.

Saving for Retirement

Regardless of your age, if you are planning to retire at any time, it is important to save today, save consistently, and save wisely. Let’s review another top 10 list, this one for retirement planning. There are many options to save for retirement and ways to do it, including your employer’s retirement savings plan or an IRA. Examining your needs through a retirement calculator is also helpful.

Once you realize the importance of saving and the role that it plays in your life, creating goals is the next step to stay on track. Part of setting financial goals is making sure you can meet them. You can use an online savings calculator, for example, to make sure your needs align with your plan.

Specific Steps

Armed with the education and tools to create realistic goals for your money, it is time to find and dedicate the money to reach your goals.

1. The first thing you need to do is have a budget and stick to it. This includes being realistic about your household financial situation, and setting honest and attainable numbers corresponding to your spending, so that you can save. Saying you will save and thinking about savings is not enough. You will have to be intentional about what you do with your money.

2. You need to understand cash flow; what it is, how it works and what your personal household cash flow looks like. Review your income and expenses and see where your spending habits lie. Be intentional about making changes to things you can, to have money available to save.

3. If you are married, communication and team work concerning your household finances are crucial. To save, you both need to be on board with your desires, plans and resources. The best laid plans without everyone on board, will meet turmoil.

4. Understand the differences between needs and wants and identify yours. Be able to say no when something doesn’t align with your financial goals, today and in the future.

5. Automate savings so the money goes and stays. If you wait until the end of the month to save, the likelihood will be that there is not much left to save. Make it automatic and save when you first get paid. If you have a few savings objectives, you can track the money you put into each account and put it through one account or use a few different savings accounts open for various goals. When you see savings and its growth, you are more likely to keep it there.

6. Review everything you pay for. What are you paying for that you might not need? Is there a way to pay less? Sometimes we do not even realize what are spending each month until we examine it.

7. What expenses or items can you cut to enhance your savings goals? Bank rate gives 5 opportunities in your budget and spending to cut expenses, including energy and car gas, food and groceries, banking and credit, taxes and car insurance. All of these areas should be reviewed for opportunities.

8. Remember whatever your goal is, start now. Something will always come up and compete for your resources. Saving for the future should stay in the forefront of your mind (and your finances!) regardless of whatever else comes around.

9. Also, take into consideration your children. It is incredibly important to teach them about savings and spending. They mirror your behaviors and will take your lead on the role of money in their lives. Some essential lessons, summarized in this Forbes article, include waiting to purchase something you want, saving, identifying specific ways for children to save such as using jars or envelopes, making wise choices and understanding that when money is spent, it can not be spent somewhere else.

10. Recognize the importance of savings, but also enjoy life.

The Bottom Line

The above strategies will help you to stick to a budget and save for your goals all while allowing for some budgeted fun. Remember, a goal without a plan is just a wish. Write it down, create the time and opportunity and make it happen.

How Much in Savings You Need to Live Comfortably

According to the Federal Reserve’s study on economic well-being in U.S. households, published in 2016, Americans are satisfied with how they are doing financially. The number of adults reporting they are “living comfortably” or “doing okay” rose to 69%, up from 65% in 2014 and 62% in 2013. However, surveyors then asked a series of follow-up questions that called into serious question what most Americans perceive as comfortable. For example, 46% of study participants admitted that if an unexpected expense costing $400 arose, they would be unable to pay for it without selling property or borrowing money. Of the 22% of respondents who incurred an unexpected medical expense over the previous year, nearly half, or 46%, still had debt from that expense.

It’s difficult to rationalize the impressions most Americans have of their financial situations with actual numbers. Simple math indicates sizable overlap among those who claim they are doing fine financially, yet could not pay out of pocket for a basic car repair. This calls into question whether $400 in savings can support a comfortable existence. It also raises other interesting questions, such as how much in savings is truly sufficient to be financially secure, and how this number may vary based on a person’s stage of life and living standards.

Minimum Savings for Comfortable Living

Financial guru Dave Ramsey, who advocates debt-free living and financial security, advises $1,000 in the bank as a starting point for clients who are destitute or currently have no savings. This sum, though insufficient to live on for long if an income loss occurs, at the very least prevents a car breakdown or minor medical mishap from causing a financial disaster. Despite the high level of financial security self-reported by the majority of Americans, nearly half lack this basic first step for an emergency fund.

Three-to-six months of living expenses represents a more comfortable nest egg. Three months of expenses is a sufficient emergency fund in periods of low employment, assuming the person possesses high-demand skills. This level of savings is particularly secure if the person is willing to cut back on discretionary purchases and live a frugal lifestyle. Those with fewer marketable skills and those who have fewer expenses that they are willing to forgo should aim to keep a full six months’ expenses in savings.

Other Considerations

The exact amount that constitutes comfortable savings varies based on a person’s unique circumstances. A person with children requires a bigger cushion, since that person is responsible for providing for others. A single person with no children needs less in savings, particularly if he or she is willing to live a bare-bones existence or take any job that is available in a pinch.

A person who still lives at home with parents and has no expenses, or who shares a dwelling with several roommates and has minimal expenses, can more comfortably cut savings than someone who has a stack of bills to pay every month. Of course, many people in these situations find it an ideal time to put money away, perhaps saving up for a house down payment at a later date.

Similarly, a person’s debt load influences how many months of income represent sufficient savings. For example, if 30% of a person’s take-home pay goes toward debt payments each month, that person clearly needs more savings than a debt-free person.

Every person is unique when it comes to his financial needs. No matter the dollar amount of a person’s savings, what matters is the ability to stave off financial calamity for as long as needed in the case of a job loss or income reduction.