In our daily life, we constantly make plans;
- Planning to go on vacation.
- Planning to have a family.
- Planning for retirement.
- Planning a party.
But, what about financial plans? Have you taken the time to plan your financial future? This is a vital step to take if you want to prosper. Not to mention that it also gives you more choice and peace of mind. It enables you to see the big picture and to set achievable, short-term and long-term goals.
What’s financial plan & what it entails?
A financial plan is your road map through life. It combines all the elements and stages of your life with your financial objectives, so you can live the life of your dreams.
Having a comprehensive financial plan is extremely beneficial to people of all ages, regardless of the size of your income. If you want to be successful, you need to make plans and take action. In fact, having and implementing a good, financial plan can even help you to increase your income and upgrade your lifestyle.
It will also enable you to make smart, financial decisions, so you can ultimately achieve your goals faster and attain financial security.
In the current, economic times, which are filled with uncertainty, having a financial plan provides you with a strong foundation and a sound strategy to manage and protect your family
Examine your financial situation
The first step in financial planning is to examine your current, financial situation.
- What financial steps have you taken to date?
- What have you achieved so far?
- What resources do you currently have at your disposal?
- What financial aspects as well as contingencies have you considered
At this stage, it’s important to analyze all your assets, liabilities, current investments, cash flow, contingency plans, tax strategies, insurance coverage and retirement plans.
By answering these questions and reviewing your situation, you will obtain a better view of your current financial position. In turn, this will provide you with a good basis to create a sound financial plan.
Put your financial plan into action
Once you’ve evaluated your current financial position, and established your goals, you can create a plan of action. Your financial plan will specify exactly what you need to do, and when you need to do it, in order to achieve your goals. Hence, your financial plan should include the following:
- Set a timeframe and clearly specify what you’d like to achieve within the next 5 years, 10 years, 30 years, etcetera.
- Create a budget for your income and expenses, and monitor your cash flow. Include all your sources of income (salary, rental income, your own business, an inheritance) and all possible expenses. Ensure that you use your money wisely to create even greater wealth. In addition, try to reduce your unproductive debt and even eliminate it.
- Plan for the life you want to lead and consider the steps that you need to take, and the investments that you need to make,
- In order to achieve this. You should also consider different scenarios that may occur, such as buying a new home, quitting a job or starting a new business. If you include these possible events in your financial plans, you’ll be prepared to handle them as they arise.
- Think about your children and what their future needs will be. The cost of education is constantly rising and weddings are not cheap. So, it’s a good idea to plan ahead and save in advance.
- Have you planned for retirement? Are you currently saving enough to maintain the lifestyle you want after you retire? The sooner you plan and save for retirement, the more peace of mind you will have when it’s time to retire.
- Estate planning is also essential. If you want to protect your assets and ensure that your dependents are properly provided for after you’re gone, you should set up a will and, possibly, even a trust.
Your financial situation will affect virtually every other aspect of your life, so it makes sense to implement a good financial plan. A sound financial plan will give you a clear view of your current situation, a road map to where you want to go and peace of mind about your and your family’s financial future