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Grab a pen and paper - here are the basics of financial planning.

In order to create a financial plan for yourself you need two pieces of information. The first piece is your income (weekly, monthly, annual), however you want to look at it. The second item is a quick list of your expenses with a brief description of each.

Once you have your income and expenses, you are prepared to create a simple budget for yourself that will identify how you are currently spending your money and how much money (if any) you should expect to have left over each period (week, month, year). From that point, you can make decisions about what expenses to eliminate, such as morning coffee, eating out at lunch, paying someone to clean your home, etc. Then you can take these 'savings' and allocate them to some type of savings account, whether it be a simple bank account, a certificate of deposit or a stock account or IRA.

After you have made this allocation into some type of savings account, you can calculate approximately how much you will have over particular periods of time. Generally, people would estimate their savings when they turn 62 or 65, or a pre-determined retirement age.

This is financial planning 101.

Learn more about this author, Trip Todd.
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