The first step in managing your finances should be a financial plan, a strategy to maximize your earnings and minimize your debts, according to a report from the American Institute of Certified Public Accountants.
In a report released today, APA and the Center for Financial Management at the University of Missouri in Kansas City said financial planning can help you better understand your financial situation, identify areas of your spending and income that are more sustainable, and plan how to minimize the impact of the next recession.
The report recommends two approaches for financial planning.
One is the traditional method that is more common in the United States, where most people start saving and investing, and the other is the new “frugal” approach that is being embraced in some parts of Europe, Canada and Australia.
The new approach focuses on creating a balanced budget that includes expenses and savings and includes a balanced balance sheet.
This is not to say that you should not have a financial cushion, but it should not be used as a crutch to get out of debt.
This strategy also means you should work toward a budget that is within your means.
The APA report recommends setting aside a percentage of your earnings for a rainy day fund and investing the remainder in your savings and other assets.
In other words, if you are earning $1,000 a month, you should invest $1 in your rainy day savings account to take advantage of the $100 in earnings from that fund.
In that situation, you would put the remaining $1 per month into a rainy-day fund.
The APA said this approach has the potential to reduce your financial burden, although it has to be carefully considered.
It also has the risk that it may not be financially sustainable for most people to do this, the report said.
This is not a bad idea.
It is just a matter of how you choose to spend it, the APA reported.
But there is also the risk of overspending.
If you are using the traditional approach and you are overspent, you are not likely to be able to make a meaningful dent in your financial position.
You will need to work on balancing your needs and your income so that you have a budget with a healthy amount of cash to live on.
In some cases, the savings and investments can be too high and your balance sheet too small.
A balanced financial plan should include: An asset allocation to avoid overspenders A list of assets and liabilities to consider and a balance sheet that can support those assets and other liabilities A financial plan that reflects your goals and the best ways to achieve them, and how much you can save, invest and pay down your debt in the future.
To learn more about how to build a financial strategy, go to www.financialplan.org.APA said that financial planners can help your financial life better.
“As a certified financial planner, you can create a financial blueprint that helps you identify and minimize the risks of financial problems,” said APA CEO, Susan Schoener.
“And the financial planner will help you identify the tools you need to manage these risks.”APA also offers a financial literacy course that will teach financial planning and financial literacy, which includes information on the importance of being consistent with your budget.
For more information, go here: www.apa.org/financial-management