Personal financial planning is something we all do, even if we don’t always put it in writing. A simple approach to cut down expenses is also termed as financial planning that can reap major benefits for you in the long run. We all have a general idea of what we expect for our current life, our family and out future and these all involve managing our finances and thinking about our future. There are certain things we can do to break the personal financial planning process down into steps that we can more easily develop a plan for our future and the future of our families. Follow these six steps to help you with the personal financial planning process.
- Define financial goals. Before you can reach your destination, you first have to know what that destination is. Bottom line is with out having goals for your life, it is going to be hard for you to mange your finances in a way that will help you reach your goals. Do you have kids that you are going to put through college? Do you want to travel after you retire? Do you want a retirement home where it doesn’t snow?
- Develop a strategic plan for achieving your goals. You may need to enlist the services of a financial planner to help your with this step. Some employers have financial planning as a benefit. They will help you make a plan for eliminating your debt. Then your financial planner can help select the investment vehicles that will best assist you in saving for your goals. There are many options available and a professional can explain them and help you make educated decisions about your financial future.
- Put your financial plan into action. This step is relatively straight forward. This is where you will set up automatic deductions so that your money will end up in your selected investment vehicles. Follow through with the plan that you and your financial planner developed.
- Monitor and control your progress. Periodically, take time to evaluate whether your plan is on track. Are you meeting target dates that you have set for yourself? Are your investments performing the way you are expecting? Are you controlling your debt?
- Make corrective action to your plan, if needed. From time to time life hands us situations that cause us to need to rethink our original plan. Our investment may not be performing as planned. Things such as illness, the birth of a child and the loss of a job may give us reason to have to change our plans for the future. Changes in your life of this magnitude will also require you to rethink your budgeting and your investments.
- Revise your goals and plans as your life changes. As life changing events occur, make the necessary changes in your plan to meet your new goals. Adjust your plan according to how you wish to live your future.
Personal financial planning can help you have the future you desire. Start early and become knowledgeable about financial planning and investments. Control your debt and you will be well on your way to having a financially secure life.