Planning Now: 5 simple steps for a better financial future

Fact checked by Derick Wilder

It doesn’t matter if you’re working or retired, or whether your nest egg is big or small: A few simple steps today can strengthen your financial situation in the years to come.

We spoke with two financial advisers on ways you can use your money now to build a sturdier financial future.

1. Track your income and expenses to develop a realistic budget

The first and most important step is to track your cash flow and develop a workable budget, says Thrivent financial adviser John Furjanic, who’s based in Downers Grove.

“I like the analogy of a financial house. The foundation of cash flow and budgeting are really key, no matter where you are [in] it,” he says.

Track your spending the old-school way with paper and pencil, or go the digital route and use an app. NerdWallet’s picks for budgeting apps include You Need a Budget, EveryDollar, and PocketGuard. AARP’s Money Map is another free money management tool that can help you track your monthly expenses and your progress toward building savings and paying down debt.

2. Pay down debt, and build up an emergency fund

Kent Wallbruch, who owns LTC Solutions in Aurora, says this step is crucial. “Those are really key things to do, if possible,” he adds. “Life has a habit of throwing curveballs.”

Yet, reducing debt and saving up can be especially difficult for people on a tight budget who are doing everything to get by — make rent or mortgage, buy groceries, pay for healthcare. However, prioritizing both, with even the smallest available funds, will help build savings in the long run and protect against extra spending on interest payments.

3. Set concrete, measurable goals

The next step is to set measurable short-, medium-, and long-term financial goals, Furjanic says. Goals should include both big goals, like saving for retirement, and smaller goals, like paying off credit card debt or saving for a vacation.

“It’s crucial to have defined objectives and work your way back,” he says. “If you don’t know what you want, you won’t know when you get there.”

4. Organize your financial and legal paperwork

Make sure you have a will, a power of attorney, advance directives, and other legal and financial documents completed and up to date, Wallbruch says. Having your paperwork in order will make it easier for others to carry out your wishes if you’re incapacitated.

“Talk to an elder law attorney, and get some basic documents in place,” he says.

5. Start thinking about your long-term care options

While no one wants to think about needing assistance with activities of daily living, it is important to think about your long-term care long before you need it, Wallbruch says. He adds, “There is a chance that you never become frail and need care over a period of years. But if you do, the consequences to your family and retirement portfolio could be so severe that the topic must be discussed.”

The cost of care is often prohibitive: The average monthly cost of assisted living in Chicago is $6,500, and the cost of a private room in a nursing home averages more than $11,000 a month. While those numbers are high, thinking about your options before care is needed can ease the stress on you and your family members if and when you eventually need help.

Depending on your financial circumstances, options might include purchasing long-term care insurance, selling your house to pay for care, using your savings, or putting together a network of family and friends to help you. Whatever your options, the overall takeaway: prepare.

“Plan for situations when you are 65 years old, not 80 to 90 years old,” Furjanic says. “The sooner you can plan for outcomes, the better chance you have for reaching them.”

Originally published in the Summer/Fall 2024 print issue