Personal Financial Planning
Learning to control your day-to-day financial affairs to enable you to do the things that bring you satisfaction and enjoyment is the first step in personal financial planning. Planning and following a budget will help you achieve this level of financial management.
Choosing and following a course toward achieving your long-term financial goals is the second step in personal financial planning.
As with anything else in life, without financial goals and specific plans for meeting them, you will just drift along and leave our future to chance. A wise man once said: “Most people don’t plan to fail; they just fail to plan.”
The end result is the same and it is a failure to reach financial independence.
Learning how to build a financial safety net, which is like to having a retirement fund for when you are no longer generating any income is the third step in personal financial planning.
Four Simple Steps For Financial Goal Setting
Identify and make a note of your financial goals, whether they are saving to send your kids to college or University, paying off credit card debt, saving for a down payment on a house, buying a new car, going on vacation, or planning for you and your spouseâ€™s retirement.
Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals; which will make this procedure easier.
Educate yourself and do your research. Read Money magazine or a book about investing, or surf the Internet’s investment web sites. Do not be afraid of the stock market.
Yes, there is a potential for loss, but you can ensure your financial future, if you do your research and get a trustworthy broker. Just remember not to put all of your eggs in one basket.
Diversify your portfolio. With a little effort you can learn enough to make educated decisions that will increase your net worth many times over. Then identify small, measurable steps you can take to achieve these goals, and put this action plan to work.
As often as needed evaluate your progress. Review your progress monthly, quarterly, or at any other interval you feel comfortable with, but at least semi-annually, to determine if your program is working.
Re-evaluate your approach and make changes as necessary, if you’re not making a satisfactory amount of progress on a particular goal. There are no hard and fast rules for implementing a financial plan. The important thing is to at least do something as opposed to nothing, and to start NOW.
Sometimes when people write down their goals, they find out that some of the goals are too broad in meaning and nearly not possible to reach, while others may seem smaller in scope and easier to attain.
It is okay to dare to dream about riches, but be practical about what you can actually do. A good idea is to break your goals down into three separate categories of time.
Long-term goals (over 5 years) are those things that won’t happen overnight, no matter how hard you work to attain them. They make take a long time to accomplish, so give yourself a reasonable amount of time, that are based on your best estimates of what it will take to attain them.
Examples of long-term goals might include retirement plan or purchasing a home, college education for a child. Whatever the case, these goals generally require longer commitments and often more money in the end.
Intermediate-term goals (1-5 years) are the type of goals that can’t be executed overnight but might not take many years to accomplish. Examples might include getting an education or certification, purchasing/replacing a car, or paying off your debts like credit cards etc.
Short-term goals (within one year) generally take one year or less to achieve, based on the date the task is needed, the total estimated cost, and the required savings.
What are your goals? To find out, you need to make up a list, decide which timeline your goal fits into, detail the steps necessary to achieve your goals, then take action toward reaching those goals. Itâ€™s that simple.
You might be wondering where to start when deciding how to go about to start your financial goals. These are some basic tips to help you in making the best choices for you.
Basic Tips For Financial Goal Setting
After looking at these tips, it is best for you to go out and do some research to find the method(s) that suit you best.
- Begin by putting 5%-10% out of each pay check in a savings account
- Start making a budget for yourself that leaves you with some extra money and follow it
- Work with a credit counselor to get help in lowering your monthly expenses and get rid of your debt
- Use your coupons that are why they are there. It seems like small savings, but add together you could save 20-30 dollars at each trip to the market
- Look into different investment strategies such as IRAâ€™s, stocks, RRSPâ€™s, mutual Funds, personal investments etc. There are many more and all can assist you in short and long term goals.
- Shop around for bargains
- Do not live outside of your means