Financial planning might seem like something only the wealthy amongst us has to worry about, but the truth is that financial planning is how many if not all of the wealthy get to where they are. It is essentially being clear and intentional with your money so it works for you and with you. To get you started on your financial planning journey here are the five things you need to assess and include in your plan.
How to create a financial plan
The first thing to do when creating a financial plan is to get clear on what you need to plan for:
- How much debt will be you repaying in the next six months?
- What is your monthly budget for living expenses?
- Is your emergency fund available should you need it?
- Are you investing any money?
- Are you saving for the short-term and long-term?
Now that we are clear on what is coming in, going out, and being saved it’s time to get clear all other aspects of financial planning.
1. What are your financial goals?
The first thing to remember is you must have a destination. Where do you want to be? What do you want your finances to look like in five or ten years? You need to have a clear goal in order to achieve it.
2. Plan for taxes
They come around every year, so why can’t you be prepared? This might require the help of a professional, but it’s so important. Ensure that you are keeping an eye on your income so that you can plan for how much you have to pay.
Also, be sure that you are taking advantage of any and all tax breaks that are available to you. After all, you want to keep as much money as possible, right?
3. Ensure that you are appropriately insured.
This one is particularly important! You can do all the planning in the world but if you don’t have a plan in place for the unthinkable, then your plan is not effective. Life insurance, home insurance, car insurance are all things that can greatly impact your bottom line if they are not properly in place. So, take this time to review or instate policies and ensure that they are all doing what you need them to do.
4. Pay off your debt
This one won’t be fun, but man will it be worth it! Don’t forget that you’re not just paying for your debt, but also you have to account for that pesky interest. The sooner you pay off the debt the sooner you can save yourself on all that interest! So, bite the bullet and pay it off so you can move on to the fun stuff! This is an important aspect of your financial planning journey.
5. Get rid of those subscriptions
That subscription that you keep thinking you’ll use but never end up using that is the one I’m talking about. Subscriptions are great for companies, because you don’t think about it, but not so great for your financial goals because you don’t think about it.
So, hack the system and take a solid look at your subscriptions and ensure that you are using them all so you’re not throwing money away every month!
Remember financial planning is an ongoing process. Your first financial plan may not work for you in six months or even a week from now. This is something that you are meant to refer back to and change as needed.
If you’ve done your financial plan correctly it should reduce your stress and support your current needs while helping to ensure you meet future goals. Still, need some help? I would love to help you, book a call with me HERE to discuss how I can help with your financial planning.
