The harsh reality is, no one cares about your financial stability more than you. This is why it is vital to build a strong financial plan for yourself. Personal financial planning will allow you to generate savings, afford to live a comfortable life and achieve your long-term goals.
Unsurprisingly, everyone’s financial plan in life is different. The financial needs of a person in their 20’s freshly graduated are entirely different to a family of four with young children and so on. Despite our differences, we all tend to have the same financial goal – To achieve stability in our finances and build upon our cash flow.
Deciding to take control and get a solid understanding of your finances is the best and easiest way to invest in your future today. That is why we’ve outlined some key points to take note of to help you take control of your finances.
Determine the type of personal financial planning you need
This may seem obvious but the first question you should be considering is, who is this personal financial planning for?
You may be a person who lives alone and the only person reliant on your income. This means you need a plan that will help you meet your immediate financial needs whilst providing for your future goals.
If you are married or have a significant other, then it is often the case that you will need to manage your finances as a team. Making financial decisions together, understanding your budget together whilst putting aside savings, and making investments. You might also need to consider options such as income protection or critical illness cover.
Regardless of whether you team up or tackle the path to financial stability alone, it’s important to be mindful of the fact that either route isn’t always a smooth and stable one. Life is full of surprises that we can’t always plan for but we can try to do as much as possible to ensure we are always in the best position possible in the instance of those events.
Here are our top steps to creating a strong financial plan:
Know your budget
Love or hate it, you need to budget. That is if you want to be financially stable. By all means, buy the sparkly shiny things and completely blow this month’s salary. You’ll feel great today but maybe not next week when you’re struggling to make ends meet enough to afford your bills and dinner.
The process of budgeting doesn’t have to be complicated. You need to create a system that works for you. Have a strong understanding of what your income will be each month, the dates your bills need paying and how much money you’ll have leftover for you to do what you wish with.
Know your personal financial planning goals
To achieve your goals, you must have a strong understanding of your current financial situation. Ask yourself if your current situation provides you with enough income to achieve your goals.
If not, find the solution. It may mean considering changing where you live, looking for a higher-paid job, or taking on more hours at work.
Pay off debt
It’s incredibly difficult to plan financial freedom and achieve your financial goals with the burden of debt weighing you down. That’s why when creating a financial plan, it’s imperative that getting out of debt is one of your first considerations.
High interest rates, large minimum monthly payments, and the damage lots of debt can do to your credit score, you’re better off paying your debts first. Focus on those credit cards and loans getting paid off to move into times where you don’t need such things to keep you afloat.
Get the right protection
After working tirelessly to earn your money and pay off debt, the last thing you want is an unplanned occurrence or incident to wipe your bank account cleanout. Investing in protection can feel daunting, paying out for something you hope that you never need. However, it will provide you with the peace of mind that you have a backup plan locked and loaded in place. Protecting your assets in case the event occurs that requires a large sum of money to resolve.
When taking out the protection you should focus on health, auto, disability, life, and home insurance. You want to cover anything of value in your life and keep yourself covered in any way you can. Having the right protection can turn what could otherwise be a major disaster into a mere inconvenience.