Every day, each of us earns and spends money. But few people think about what their financial situation will be in a few years or when they retire. Regular financial planning can help you manage your finances. Spending a little time drawing up your personal financial plan will help you look more confidently into tomorrow and get closer to gaining the long-awaited financial freedom.
It is necessary
Personal financial plan
Instructions
Step 1
Define your personal financial goals. Answer honestly to yourself the question: "What do I want financially?" Your plan should be based on your goals, desires, and aspirations. Financial goals should be specific and tangible. The vague answer “I want to be financially independent” will not help you in any way to put things in order in your personal finances. The correctly set goals sound like this: in a year I want to buy a new car, in five years - to pay for the child's education at a university, and so on. You need to know the specific terms and amounts that you will need.
Step 2
Analyze your current financial situation. This step is a lot like setting up accounting in a small company. Get a picture of your assets and liabilities, income and expenses. Try to take into account all items of income and expenses, including transportation costs, grocery purchases, utility bills. For most modern people, expenses are equal to income, or even exceed them when it comes to loans. The first step to remedying the situation is to keep track of and control your expenses.
Step 3
Assess your property and free finances. Which of them are assets, that is, generate income (for example, rental housing, securities, bank deposit)? Which ones, on the contrary, are liabilities, that is, bring losses (for example, money "in stocking" that inflation eats up every month, land that you do not use)? It is often more expedient to get rid of the liability by selling it, and invest the released funds in places that can bring additional income.
Step 4
Think about ways to protect your finances. The most famous way of such protection is insurance. Purchase insurance in case of possible disability - in this case, you will have a guarantee that you will not be left without a livelihood if something goes wrong with you, because no one can completely exclude such a possibility.
Step 5
Create a cash reserve sufficient for the family's normal existence for several months. In this case, if you lose your source of income, you will feel more confident until you fix the situation.
Step 6
Determine how much of the funds you can use to invest. Make it a rule to allocate at least 10% of any income received for these purposes.
Step 7
Determine your investment strategy and select the appropriate tools. Here you cannot do without training in financial management, which can be obtained at the corresponding courses and seminars held in every major city. The choice of specific investment instruments presupposes your knowledge of the types of investments and methods of risk management. If you do not have the opportunity to spend time improving your financial education, opt for mutual funds and bank deposits.
