Personal financial planning is a highly encouraged practice for you to lead a well-organized life. Financial planning at a personal level starts with creating a comprehensive financial plan. Though the process is not too complicated, it does involve six essential steps to ensure success.
Enlist your income and expenses
The first step before embarking on personal financial planning is to get a current overview of your financial income and expenses. By listing all streams of income and comparing it to your monthly expenses, you can create a clear picture of your financial landscape. This will also help you identify areas in which you spend too much money and eliminate unnecessary sources of spending.
Assessing your financial situation
The next step involves providing a comprehensive overview of your current net worth in terms of assets and liabilities. Anything of value that is under your ownership will help you to create an accurate personal net worth.
Setting your financial goals
In case you have any specific financial objectives in mind, you should comprehensively state them at this stage. The goals can be in the form of what you intend to achieve and the prospective duration of time by when they should be completed. The goals should be specific and should comprise of a realistic statement of the amount of money involved.
Establish a saving structure
Savings should be part of your personal financial planning. Creating a savings strategy enables you to stay organized and disciplined. In this regard, a basic saving strategy should comprise of where you intend to be saving the money, how much money you target saving per month and the goal for the savings.
Begin an investment portfolio
Your financial planning cannot be complete without creating a well-researched investment portfolio out of your savings or income. Carefully selecting the available and suitable investments, including mutual funds, bonds, stock markets, or even real estate investments, enables you to expand your net worth while also sustainably boosting your income in the future.
Implementation of the plan
Your personalized financial plan should, by now, be ready for implementation. This is the most important part of the entire process. It requires substantial discipline to adhere to all stipulations of the outlined plan. You should not shy away from making alterations where necessary, in case you feel like the plan needs an upgrade for suitability.
Christopher Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.