The purpose of financial planning is to guide you to making informed, sound financial decisions. This gives you the potential of managing your own personal finances. Use financial planning to develop goals and financial plans that you need to build wealth. You need to make good financial decisions that include goals, assumptions, and money management techniques. This is an important step to take when starting a budgeting plan.
You can use financial planning to help you and your family ensure a future that is financially secure. Having a plan to prepare your finances, even before deciding on how to actually achieve that, provides a foundation for the future. Every day financial planning is necessary and can be thrown in to even greater importance because of unexpected life events.
SMART goals help you make good financial decisions
Since financial planning is necessary, it is advisable to have specific financial goals. You should actually write these down. The act of recording goals has been shown to increase the chance of you sticking to your plan. Your goals need to be SMART. That is they should be Specific, Measurable, Achievable, Realistic and Time specific. Personal finances are improved by having realistic goals.
You may have a main goal to be financially independent and free of debt. But you need to set interim targets along the way. As your financial position improves you will start to see this as achievable. You will gain a feeling of responsibility and get encouragement. Having a desire to be free of debt, gain financial freedom, and prepare your future for financial security is a noble cause.
You have three main ways to set financial goals. The three choices are do it yourself, involve your partner and family to make joint goals, and to get the help of a financial planner.
Many people set financial goals themselves. However when setting financial goals, your family should be consulted. Your goal should be set with realistic and achievable expectations. There should be a reasonable time frame set in which to reach the goal.
You should set realistic targets when you set your goals. Don’t say “I want to be financially free”. You should say, “I will eliminate my debts, and I will do this within three years”. Setting realistic goals is important because your subconscious needs to believe that your goals are attainable. Also notice how the goal is set using “I will” rather than “I want”.
You can reinforce your mind by using positive affirmations. ” I manage my money well”, “I am debt free”
Do you need a financial advisor?
You may decide to get a financial planner to help you make a financial plan. Ideally you should get advice from a qualified financial advisor. Some employers may have a system in place to help you get advice. The financial planner should outline the financial goals in a written plan and provide you with monthly, quarterly, and annual goals. In order to be successful, these goals must be aligned with your current commitments as well as your needs and desires.
You may decide that you want to take on the role of a financial planner and create your own financial plan. Be honest with yourself especially if you are already in debt. Are you capable of changing your behaviour that got you in this mess without help? You might decide that it is possible. We often become more financially responsible as we age and take on family responsibilities.
You may choose to speak to an accountant, or a life insurance agent in addition to a financial planner.
If you do decide to find a financial planner locally make sure he has all pertinent information regarding your budget, assets, liabilities, future needs, and desired long-term goals.
Financial planning can benefit you to ensure that your goals are met. Planning takes into account all aspects of your financial well-being. This planning will result in your financial future being both financially stable and financially free.
The final piece of advice I can offer you is to consider your financial future early in life. You will find it easier to achieve financial freedom if you learn to make good financial decisions at an early age. The earlier you begin to make payments to a pension, the cheaper those payments will be.