Financial Planning – What it is and how to do it

Financial planningTo many people, financial planning sounds like something for the very rich. The wealthy take their piles of money to someone who tells them where to invest it so they can make even more. The rest of us focus on saving what we can and paying off debt and hoping we become financially stable.

What though, is financial planning really about? It is about having long and short-term financial goals and developing a plan to achieve them. It’s about knowing how to make the most of your money. This can include putting a little extra into savings one month or quickly paying off a bit of debt.

Financial planning includes smart decisions. Smart decisions ensure your money is working for your while reducing stress. You will also become financially stable faster, helping you survive unexpected major expenditures.

In short, financial planning is something everyone can enjoy.

Financial Planning: 1.) Your Goals

What do you need to do? You start by figuring out your current financial situation. What are your assets, debts, and what do you spend your money on? What do you want to spend your money on in the next year? Where do you want to be financially in five years? Do you have any major expenditures on the horizon? When do you want to retire? How much do you need to save?

Set out your immediate, medium, and long-term goals. These vary depending on your circumstances. For instance, what is your age? (People nearing retirement have different goals than those just starting their career). What are your current financial circumstances? Are you married? Do you have children?

Financial Planning: 2.) Your Plan

Your financial plan involves determining how you will get from where you are now to where you want to be. You’ll determine how much money will go into savings and how much will pay off debt. You’ll set a budget for how much you can realistically spend a month and whether you can invest.

Understanding where your money goes can help you make better decisions. It also helps you be realistic about your goals.

People who don’t have a plan tend to spend more than they need to and wind up with nothing in savings and loads of debt. People who have a plan tend to stick to it and find it easier to save money and pay off their debt.

Your Financial Planner

A financial planner can help you set goals and determine how much you need to save to be secure into retirement. They can help you understand your finances better, so you can boost your savings and possibly reduce your tax load.

They’ll even check on you to keep you accountable for your finances. If things change (and they will) they can help you adapt.

Once you are financially stable, you will want to start investing. A planner will show you how different investments fit into your plan and how you can make the most of them.

Final Thoughts

In summary, what will a financial plan help you with? Setting your goals, saving money, ordering your finances and decreasing your financial stress. It’s the difference between scraping by or being financially secure.

It doesn’t matter how much money you have or earn, a financial planner can help you. We all need to save for retirement, know what debt to pay down first, or if we can afford a vacation. A financial planner can help you make the best decisions with your money.

If you’d like to get one-on-one advice for any of your business situations contact me, Jamie Tulloch, I’d love to help you out.

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