By creating a financial plan, you create a roadmap for your money and help yourself reach your goals. This can be done by yourself or with the help of a financial planner.
You create a financial plan to help you understand your current financial situation, your financial goals, and the strategies you will use to achieve them. You should plan your finances in detail, including your cash flow, savings, debt, investments, insurance, and other factors. For more information, visit epictrust.com.
Financial planning: what is it?
Having a financial plan in place gives you the ability to reduce your stress about money, support your current needs, and build an emergency fund for your retirement. A financial plan helps you maximize your assets and ensure that your future goals are met by maximizing your assets.
Every person should create a roadmap for their financial future: Financial planning isn’t just for the wealthy. A financial planner can help you make a financial plan, or you can do it yourself. Getting financial planning assistance has never been easier and more affordable thanks to online services like robo-advisors.
Four steps to financial planning
1. Decide what your financial goals are
Your financial goals should guide your financial plan. Consider your financial planning from the viewpoint of what your money is going to do for you – whether that is purchasing a house or helping you retire early – and you will feel more motivated to save.
Think about your financial goals in terms of how you would like your life to be in five years’ time. Ten years from now? Twenty years from now? Do you dream of owning a house or a car in the future? Do you dream of having children? When you retire, how do you envision your life?
By setting goals, you gain motivation to take action and provide a guiding light as you strive to achieve those aims.
2. Redirect your money to your goals by tracking it
Find out what your monthly cash flow is – what comes in and what goes out. In order to create a financial plan, an accurate picture is imperative, and it can indicate opportunities to direct more funds to savings or debt repayment. You should know where your money goes so that you can develop short-, medium-, and long-term goals.
3. Make sure your employer matches your contributions
Whenever you seek financial advice from an advisor, ask him or her the following questions: Is your employer providing you a 401(k) plan, and does it match any of your contributions? More 401(k) matching insights can be read at Daily Prosper.
It’s true that contributions to a 401(k) reduce your take-home pay, but it’s worth it to invest enough to receive the full employer match, because it’s free money. Here are the 401(k) contribution amounts you should make.
4. Prevent disasters from becoming emergencies
Putting away cash for emergency expenses is the foundation of any financial plan. Starting small is a good idea – $500 will cover small emergencies and repairs, and it will keep you from running up credit card debt. Then you could jump to $1,000, then to one month’s cost of living, then so on.
Your budget can also be shock-proofed by building credit. Your credit score gives you options when you need them, like getting a good car loan. You can also save money by getting cheaper insurance rates and skipping utility deposits with it.
How can we help you plan your finances?
You should update your financial plan as your life changes – it is not a static document. When you have a major life milestone, such as a marriage, a birth, a career change or loss of a loved one, you should reevaluate your financial plan.
