Financial Planning can get complex and feel overwhelming, especially if you’re just starting on your financial literacy journey. There are a few basic tenants that you’ll need to understand when creating your first financial plan. Don’t let it intimidate you, there is plenty of time to learn more about finances. Let’s focus on three main parts of financial planning. Spending: This includes everything you spend your money on, including both discretionary and non-discretionary spending. You’ll need to understand your housing costs (including utilities), debt, and purchases such as groceries. A good way to organize your spending would be putting them into two categories: fixed price, and variable price. Fixed price expenses are things like rent, which doesn’t change month-to-month. Variable price expenses could be things like groceries, where you have a general range of what you pay on a monthly basis, but can’t pinpoint an exact price. Finding ways to spend less money on your monthly expenses is always a good idea. Saving: This includes your income not spent, whether it’s sitting in a checking account, savings account, or invested. Generally, you want to maximize your savings. One savings strategy that almost anyone can benefit from is utilizing an IRA (Individual Retirement Account). IRA’s are investment accounts that have tax-mitigating strategies built in. They accrue compound interest so that when you retire, your money has been hard at work creating a return on investment. There are different types of IRAs, so be sure to do your research before investing. Strategizing: This includes all of your goals, creating a budget, a retirement plan, and more. Start with identifying your goals: what do you want out of life and what kind of money will you need to achieve your goals? Then, you’ll want a budget. A budget will help you minimize your spending and make the most of your savings. There are many different ways to create a budget, but they all start with understanding where your money is going. A big part of your strategy should be balancing paying off debt and investing. But, before turning your focus to paying off debt or investing, you’ll want to have an emergency fund saved up that can cover at least three months of expenses. Once you have an emergency fund, begin paying off debts with the highest interests. Once you have high interest debt paid off, you can begin investing and continuing to pay your low interest debt. Financial planning doesn’t need to be complicated, but if you’re feeling overwhelmed give us a call. We are more than happy to help you organize your spending and saving, and come up with a strategy that you can follow without confusion. Any opinions are those of Munn Gray & Associates, Inc. and not necessarily those of Raymond James.  Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment decision.  Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.  Prior to making an investment decision, please consult with your financial advisor about your individual situation.