A financial plan is crucial to being able to achieve what you want in life. Yet it can feel like an overwhelming task to create a plan – there seems to be so many details and at the same time so many unknowns that you just can plan for.
Yet it does not have to be an impossible task. Here are some rough guidelines on how to come up with a basic plan for your financial future.
How to create a financial plan:
Your first step is to select a goal that requires a financial input – such as retirement.
Once you have selected a goal it is time to guesstimate how much it will cost you to accomplish this goal. For some goals such as buying a new car without taking out Riverside title loans it will be easier to get this number correct, but for others such as retirement it can be very difficult to come up with a number, especially the further away from the goal you are.
However you still need to come up with a number that you can begin aiming for, no matter how far away the goal is. Just do the best that you can today and remember that you can always make adjustments as your life changes.
Once you have your number figured out it is time to determine how much you need to save each month in order to achieve your goal. For example if you want to save $20,000 to buy a new car in 2 years you will need to save $834 a month (20,000 divided by 24 then rounded up).
For goals that are further out such as retirement consider using a calculator that will help you fine tune that number.
Now comes the fun part (that is sarcasm)– you need to figure out how to get that savings number into your household budget. This is the most important part of creating a financial plan that works.
Without making this happen you have defeated the purpose of creating a life and financial plan.
No point in having a plan and not taking action on it! (Tweet This Quote)
Things to keep in mind when creating a financial plan:
- With your retirement numbers you will need to update and revise them once every couple years, although if retirement is within 10 year you should do it at least once a year. Since retirement has so many variables especially when it is a ways out you need to continually fine tune to ensure that you are still moving in the right direction.
- Once a year you will want to review your life and financial plan to make sure you still want what you decided you wanted last year. Lots can happen in one year that will change your goals, wants and desires. For example; having kids, getting laid off, the passing of a parent or spouse or a serious illness can have a big impact on what you want from life.
- More in-depth plans that involve estate planning, more complex goals and instruments may require you to consider working with a trained professional that specializes in the planning and not just the investment side (this might be multiple people). Setting up a foundation requires more than just figuring out how much money you need. It will require information about laws, taxes and the actual financial part. Even a gift trust needs more advice than just determining how much you want to give. There is more than one type of trust, and extra help in understanding the differences can make a big difference.
Congratulations you are on the way to making your life dreams come true. It really is a matter of deciding what you want and then creating a plan to achieve it!
