Five Simple and Useful Financial Planning Basics
Friday, April 27, 2018, 6:00 PM | Leave Comment
I’m sure many of you want to make sure that you have a solid financial plan for a great future with your family.
Unfortunately, almost half of the population in America don’t have one! And unless you begin establishing some changes and writing down formal strategies to accomplish goals, you won’t be able to pursue any and continue living day to day with not much savings for tomorrow.
Besides hiring Financial Mappers or getting into the first investment you see, what are ways on how to begin planning your finances?
Read on as I show you five simple and useful financial planning basics to help you out.
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Define Your Goals
Before you actually get into the plan itself, you should first think about what you need your finances to do and what strategies are needed to accomplish those needs. When you have a clear set of goals, you’ll be able to create the effective plan to get there.
For example: do you have any children going to college or how old do you want to retire? Do you have any debt to pay off? That way, you’ll know how much you need to sad and set aside to pay anything off and still have enough for when you get older.
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Set Up the Budget
All types of financial planning will need you to create more money in your finances so you can make extra money to fulfill your goals.
That’s why it’s crucial to set up a budget, which helps you see how much money you spend compared to how much you earn. You’ll be able to see if you spend too much and what you can do to cut some of those unneeded expenses to direct it to areas that need attention. It doesn’t add stress but helps you stay on track with your goals!
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Cut Your Expenses
When you now have a budget and know where your money goes, you’ll now be able to prioritize what to spend on and redirect that flow of expenses. Identify the necessary expenses which you need to be paid no matter what happens. This includes your house payment, insurance, taxes, and other types of bills.
Next, prioritize other important expenses you can still control, such as your groceries, water, and electricity bills. After that, put other discretionary expenses into priority, which you can eliminate or adjust to cut without it threatening your way of living. You can now make the reductions to redirect where the extra money should be placed!
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Create an Emergency Fund
Once you have already set up your goals and budget, create an emergency fund, which is a savings account that can be available during any unexpected expense or something happens that disrupts your flow of income. That way, you’ll be able to weather short-term financial situations while having you avoid borrowing money.
The emergency fund should contain enough money to cover three to six months worth of expenses.
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Get Out of Debt and Save Up
When you have already filled up your emergency fund with enough money, it’s now time to get out of debt if you have any. I recommend that you begin with your smallest debt and pay it off, taking care of larger debts right after.
If you now have no more debts, you can start saving up for the future, setting up a retirement fund and investing for a better future.
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BONUS: Write Up Your Will
Last but not the least, financial planning won’t end even after your death. You have to make sure that you make the provisions and plan what will happen to all your properties after you pass on.
If you don’t set up the proper will, your family will have a difficult time in court figuring out how to distribute your assets. Or worse, your assets will end up disappearing, without it being distributed to those who you thought of before!
That is why you should make time with your attorney, setting up a will to give your properties according to how you wish.
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Wrapping It Up
When you want to start creating goals and dreams for your future, you don’t need to go technical and start crunching numbers. As long as you have a formal strategy and learn about the basics of saving and financing for your family, you’ll be able to achieve your goals and have what you need for tomorrow.
I hope that this article on financial planning basics helped you become more knowledgeable on what you can do for a better future. So don’t wait any longer and begin following any of these tips today.
If you have any questions or would like to share for own tips on financial planning, then comment down below. I would love to hear what you have to think.
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