It is the dream of every individual to become financially independent and successful in life. Your financial well-being is your responsibility. Hence, it is crucial to have solid personal financial planning of your own as it will help you achieve your goals and save your money for education, retirement, and so on.
If you are planning to create a financial plan of your own, then you can continue reading as you are at the right place. Here, we would explain what we mean by financial planning and how to create a solid financial plan.
What is Personal Financial Planning?
Personal Financial Planning is a continuous process of keeping a track of your finances that help you achieve your goals in the future. It is the systematic planning of your current finances and making strategies to ensure a financially stable future for you and your family.
A good and solid financial plan would include lots of details like your cash flow, debt, investments, insurance, savings, and so on. Having a retirement financial plan would also benefit you in the future, as you will not have to worry about money once you reach retirement age.
Similar is the case with personal financial planning. There is no wrong time to start a personal financial plan. We recommend you create your financial plan immediately as it is always beneficial to plan for a better future.
You may follow the steps given below to create a solid personal financial plan –
1 ) List out your Financial goals
Having financial goals will help you stay motivated and achieve financial success. It is crucial to have an idea about how you wish your future to be. After all, you should know what is it that you desire the most or want to achieve in life. Hence, we highly recommend you list out all your financial goals. The list must include your immediate as well as long-term goals.
- Your goals should be well defined and prioritized.
- Make it a point to break down your goals into smaller bits.
2) Plan and Invest your Money Wisely
To become financially independent and successful, you need to invest your money and have the willingness, tolerance, and courage to take up risks in life with your hard-earned savings.
Before you start putting your money into investments, you need to have well-defined objectives. Let it be the stock market, real estate, or even small businesses, but you need to learn how things work. You will have to plan your budget accordingly, as part of your monthly income would go towards this Investment.
If you have long-term investment goals then, you may go and put your money into long-term investment activities. Otherwise, you can go for short-term goals too.
3 ) Safeguard yourself and your family with the right insurance
Insurance is a backup plan that supports you and your family when you are going through a financially difficult phase. It is your prime responsibility to get insurance for yourself and your family.
You should also ensure that they receive financial aid if you fall sick, or if something happens to you. They would provide you with a lump sum which you can use to pay off your bills, debts, and so on. While taking insurance, you should ensure that the insurance coverage includes health, auto, disability, life, home or rental, and business.
4) Retirement Financial Planning
Let me remind you all it is always good to plan your retirement. It is never too early to plan your retirement as that helps you put your income in the right places rather than spending it on unnecessary things.
Retirement planning also helps you determine how much you will require to lead a good retirement life. For this, you will need to plan and start saving in advance for that period of your retirement age.
5) Emergency Funds.
Every day is different. We cannot expect what is there in hand for us in the coming day. So it is highly recommended to be ready with emergency funds to surpass any financial crisis.
If your source of income gets blocked or you lose your job due to some reason, you will end up in trouble. Hence, we request you to start saving your money and raise a sizable emergency amount so that you will not end up getting trapped in debts.
6) Plan your Estate, Make a Will
The money in your savings and current account, the vehicles you own, your house, every single asset you own constitutes your estate. Hence, it is your responsibility to ensure that all your assets are given to the appropriate individual in the right manner once you leave this world. Hence, we recommend you make a will on your own or with the assistance of someone whom you may trust.
To plan your estate you need to;
- List out all your assets
- Create a will
- Take the assistance of a financial planner or an estate lawyer.
7) Prioritize your debts and pay them off as quickly as possible.
Every individual ends up getting trapped in debts. But what matters is how you deal with your debts and pay them off.
There are several methods you could follow to pay off your debts. Some of them are ;
- The Debt Avalanche Method
- The Snowball Method
- Avoiding the use of credit cards, etc.
But first, you need to prioritize your debts and then plan to pay them off based on their interest rates. Another important aspect is that you need to be patient and consistent to become debt-free.
8) Don’t forget to plan your taxes
You need to include your taxes while creating a personal financial plan, as taxes are something that you cannot avoid by any chance. If you fail to do so, you will have to face serious consequences in the future.
You may also check out tax-saving investment options. They would help you save money on tax payments. You may also take the help of an accountant or financial planner for the same.
9) Reconcile and compare your bank accounts, transactions, and bill payments.
We recommend keeping track of your bank account details against any bill payments you make.
- Always check whether you have paid all the pending bills or debts
- Confirm the balance in your account by checking on the receipts against your credit card transactions.
- Review your budget
- Compare your spending with the budget you have prepared
- Establish your budget every month and plan for the upcoming month.
10) Limit your Expenditure
It is crucial to review how you spend your money once in a while. When you keep track of your expenditure, it helps you stay updated and makes it easier for you to deal with unplanned life occurrences or setbacks.
To gain financial independence, you need to stay loyal to the financial plan that you have created. You need to make some sacrifices and let go of unnecessary things to save your money.
For this, you will need to be disciplined and avoid overspending. There might be times when you end up taking the wrong steps with your money, but you must know that that’s fine. Because sometimes it’s difficult to resist the urge to buy something that isn’t there on your emergency list. However, having a solid financial plan would always help you stay motivated in achieving your financial goals
Those are the ten steps to create a solid personal financial plan. You may also take assistance if you find it difficult to manage these matters. That is exactly where our website VATTALKS.com comes into play. We provide complete business solutions. We assist in the business sectors as well as with the financial services to all our clients across the globe.
VATTALKS.com provides services like debt management, life insurance, car insurance, home loan, financial assistance, and so on. Our website is one of the top-ranked financial service companies in the UAE. We are famous across the globe for the best quality service we provide.
Our team at VATTALKS.com puts in great effort to help our clients achieve their financial goals. We are proud to say that our team consists of the best financial planners, who are ever-ready to make things easier for you. You can get our excellent service at an affordable price range. You may get financial assistance to create your personal financial planning by getting in touch with our advisors. For more information regarding our services you can visit our website VATTALKS.com