It is the process of helping you understand what’s important to you in your life and it is the roadmap that helps you achieve your goals.It is an ongoing process that can reduce your stress about money and support your current needs for your long-term goals, like retirement.
A financial plan paints a beautiful picture of your current finances, any strategies you've set to achieve those goals, and your financial goal. Financial planning must include the details of your cash flow, savings, debt, investments, insurance, and any other elements of your financial life.
Creating a financial plan is most important because it helps you to make the most of your money, helps to achieve your future goals, and gives you the confidence to be financially independent.
THE IMPACT OF FINANCIAL LIFE PLANNING
Financial life planning not only helps you to manage your money but also gives you greater peace of mind. The end result is increasing your wealth with your values and you will feel more fulfilled by the positive thoughts you've changed.
Financial planning in 7 steps
1. Set financial goals
A good financial plan is made by your own financial goals. If you approach your financial planning from the start of what your money can do for you — whether it's buying a house or anything else — you'll definitely save money more intentionally.
Make your financial goals inspirational for yourself. Ask yourself most of the time: What do I want my life to look like in five years? Where am I seeing myself in the next 10 and 20 years? Do I want to own a house or a car? Do I want an international trip? Pay off my loans? How do I see myself in retirement?
2. Track your money
Look at your monthly cash flow — what’s coming in and what’s going out. An accurate look is a key to creating a financial plan and can reveal ways to direct more to savings or debt pay-down. Seeing where your money can help you to develop immediate, medium-term, and long-term plans.
developing a budget for an immediate plan. budget principles: Put 50% of your take-home pay toward needs (housing, recurring payments, utilities, transportation, and many more ), 30% toward wants (entertainment, clothing, dining out) and 20% toward savings and debt payment. Reducing credit cards or other debt is a common medium-term plan, and planning for retirement is a typical long-term plan.
3. Get your employer match
The basis of any financial plan is putting cash away for emergency expenses. You can start saving a small part of your salary to cover small emergencies and repairs so that an unexpected bill doesn’t run up credit card debt. Your next goal could be more than tha last savings, then one month’s basic living expenses, and so on.
Building credit is another way to increase your budget. Good credit gives you options when you need them, like the ability to get a car loan. It can also boost your budget by getting you insurance and letting you skip utility deposits.
5. Tackle high-interest debt
A difficult step in any financial plan: Pay down high-interest debt, such as title loans and rent-to-own payments and credit card balances, payday loans. Interest rates on some of these are so high that you end up repaying two or three times what you borrowed.
If you’re struggling with a debt consolidation loan or debt management plan, revolving debt may help you wrap several expenses into a monthly bill at a lower interest rate.
6. Invest to build your savings
Investing sounds like that it is only for rich people or for when you’re financially stable or established in your career and family life. It’s not.
Investing can be as simple as putting money and as frictionless as opening an account. It uses a variety of tools to invest for retirement, a house or college .
7. Protect and grow your financial well-being
With each of these steps, you're building a castle to protect yourself and your family from financial drawbacks . As your career progresses, you can continue to improve your financial plan moat by:
Increasing contributions to your accounts.
Saving your emergency fund until you have three to six months of essential living expenses.
Making insurance to protect your financial stability, so that a car crash or illness doesn’t affect you. Life insurance protects the ones who depend on your income. Term life insurance helps to cover 10-year to 30-year periods, and is a good fit for most people’s needs.
Benefits Of Joining Finominal Education to gain Financial Education
This module course shows the way that various financial mathematics formulas can be utilized to conduct a detailed analysis of a bunch of information or potentially factors. This FINANCIAL EXAMS Training courses with an excellent opportunity to equip exceptionally well for the FINANCIAL EXAMS and pass the exam in your first attempt. Contact us, call or WhatsApp us on 9650353883. Finominal Education is an ideal platform to gain financial skill. A leading platform for training in the Financial field for financial exam aspirants who come with a great dream of achieving their goals in the future.
Comments