What is personal finance?
Do you have a clear Understanding of what personal finance is/consists of?
Are you equipped with the tools to become wealthy?
Why is financial planning important?
We all know the saying “Failing to plan is planning to fail” therefore the most important reason to create a financial plan is have a clear understanding of where you are now and to determine where you want to go in the future. In order to manage personal finances you will need to understand topics such as assets, liabilities, banking, savings, insurance, etc. A plan is going to help you stay organized and accountable. Often, we overestimate how far our dollars can stretch. Your plan will ensure that you have money for the things that are important to you (Listed below), emergency savings, and expenses.
Common financial goals
Bigger Home
New Car
Vacation
Retirement
Starting a Business
Investing
Children college education
How to plan financially?
Well Managing/planning out your personal finances forces you to evaluate your income and expenses over time while taking into account numerous financial risks, future life events and expectations. This will force you to think about what you want out of life and tailor your short term goals for a promising future. After you’ve thought it through; it’s now time to create a plan. Many people try to manage their finances without creating a plan and it’s probably the worst idea ever.
Your Plan should consist of your goals, current income, expenses, and ways to increase income and reduces expenses, current and/or future Investment strategy.
Next, put your financial plan into effect by remaining disciplined and making sure your adjustments/habits align with your goals.
Getting help from an accountant, financial planner, lawyer, investment advisor to help create and implement a plan is a very effective way to start taking charge of your finances.
Lastly, evaluate and monitor your financial progress. You may need to adjust the plan, but before doing so make sure that it’s the plan that needs to be adjusted and not your spending habits.
Click here for Free Financial action Plan worksheet.