Personal financial planning is something that we all know we should do more of, but few of us actually take the time to sit down and do it. However, when we dedicate some time to this task, it can give us a real purpose and focus our minds towards what we want to achieve.
Here are some ideas that will help you when it comes to putting together a personal financial blueprint.
Know What You Want
What are the ultimate aims of your personal finance plan? Until you know this, your plan isn’t going to come together at all.
The two biggest primary reasons are likely to be a desire to save money, or a desire to reduce your debts. However, you need to go far beyond these basic reasons and look at the reasons why you want to do this.
For example, you might be saving for a holiday or have a desire to relocate to another part of the country. You might decide that you’re going to quit your job and become self-employed, or you could have discovered a new hobby that you wish to participate in on a regular basis.
Keep your end objective in mind; it’ll make it much easier to stay motivated!
Look at Your Financial Reality
Consider what you already have and ensure all of your financial documents are organized. If you have an investment portfolio, be sure to consider any incomings that you might have from this as the time approaches to take out a return.
It is now time to get your business head on. What areas of your financial life can you improve by cutting unnecessary expenditure? The easiest way to approach this is to look at the things you need in order to live comfortably, rather than considering any luxuries that you might take for granted.
Depending on your objectives, it might be that you only need to give up a luxury for a few months.
Plan Your Income
At this stage, it is recommended that you only plan for guaranteed income, or if you’re self-employed, what you’re likely to earn. It can be tempting to be speculative with regards to figures, but if you do that you’re probably only going to end up disappointed when you don’t hit your targets.
Build your known income into your budget, and plan for any additional, unexpected income, such as a gift or a lottery win, for example, to go straight into a savings account or towards meeting your objectives.
Target and Commit
All you need to do now is put a timeframe on your goals and commit to them. Keep in mind what you’re trying to achieve and you’ll find it remarkably easy to stay motivated and keep driving towards your financial goal.
If you need to speak to a finance professional about certain elements of your plan, then do so as soon as possible, and you’ll be all set to achieve your financial goals and potentially change your life.
Abraham is a finance student who is planning to move into personal financial consulting at the conclusion of his studies. He has seen a number of family members struggle with finances during his life, which is what has inspired him to take this route.
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