Write a financial plan on your own
Like everything in life, you need a plan to be successful. That also applies to your personal finances. No one is completely financially secure unless they have accumulated millions of dollars and decide to live off the savings for the rest of their life.
Unfortunately, most people are not ready for retirement. Financial planning is critical to reaching your goals of retirement comfortably. But having said that, how do you go about writing a financial plan without any formal education?
Below is a quick step-by-step guide to writing your own financial plan. Of course, a professional financial planner can provide you with a more comprehensive financial plan, but this will be a good step forward in understanding your needs and removing some obstacles.
1. What are your goals?
Don’t be afraid to dream, you only live once. Think about the size of the house, education, your family, etc. Just write these thoughts on what you want the future to be like. Once you write down your ideals, remember to consider mundane issues like children’s education, insurance, etc.
Your goals should include:
* Education. Regardless of your age, additional education and training is needed, whether it’s for a career change or for self-improvement. Many people are taking college courses (even with teenagers) or upgrading to an MBA to move up the corporate ladder. Even if college education is out for you, you still have to plan for your children’s college degree, unless you intend to leave them to their own devices.
* Career. What field do you want to work in? Is it a creative job or a typical 9-5? Or do you want to be your own boss? Do you want to create multiple sources of passive income?
* Lifestyle. Is work or family more important? Are you facing a “simpler life”? Do you want a Porsche or BMW? Do you want to live in a mansion, a house facing the sea, etc? Do you have expensive golf hobbies? All of these cost money, so you need to tabulate your expenses and compare them to your income to achieve your lifestyle goals.
* Retirement. Don’t forget about retirement. It is a time when you lose your income. So how do you want to live while you are retired? Will you demote your home, live with your children, or move into a retirement community?
* Sure. Nothing is safe in life. You need to be insured for the worst case scenarios. Every financial plan must have provisions for insurance.
These goals may seem overwhelming, but they don’t have to be wishful thinking. The actual money set aside could be much less than you think, with effective financial planning.
2. Plan your income
Of course, your financial plan is not just about your dreams. How are you going to pay for it? I guess you don’t have a sweet father, so you should pursue a working life. Most people have their career paths mapped out in this format: going to college, getting a job, working hard, and retiring.
There is nothing wrong with the race, except that there is great uncertainty in today’s global environment. People change jobs all the time due to layoffs or to seek new challenges.
Instead of a day job, you may consider starting a business or becoming a freelancer to sell your skills. Business isn’t just for those with money, MBAs, or connections. You can start a home business to manage your lawn care, make money online with a website, or a vending machine business.
Besides becoming your own boss, you can find other income through network marketing or investing.
Investing is efficient for generating secondary income, as it simply increases the money you already have. You can buy gold, stocks, bonds, real estate, etc.
Regardless of whether you are a business owner or an employee, you shouldn’t let your money sit under your mattress. Even putting your money in an online savings account is more profitable.
3. Writing your financial plan
In essence, a financial plan is a budget for life. You will be budgeting not just for your next paycheck, but for your entire life. Planning involves knowing how it will arrive and when it will arrive. There are no hard and fast rules.
You need to be rational enough to assess your current situation, creative enough to see what’s possible, and have the integrity to go through with the plan. Remember, just because it is on paper does not mean it will happen; You must decide to go ahead and meet your goals.
Begin by doing the following:
* Timeline. Do you establish where you want to be in five years? Ten? Thirty? Fifty?
* Investigate the necessary costs. Your current “bills” plus 5% annual inflation. Don’t forget to consider life insurance, health insurance, car insurance, etc.
* Research luxury costs. You want to do. Cruises, nice cars, nice house, etc.
* Income strategy plan. For most people, they start with wages. But don’t forget that your job is not your only source of income. Starting a side business, a hobby to make money, or even making money online are all viable options for additional income.
* Plan investments. Investing is simply essential to counteract inflation. You can invest in anything. Just make sure you know what you are doing and don’t put all your eggs in one basket. As you age, financial security must become increasingly important.
Try to take into account all possible costs and income. Whenever you are unsure of the numbers, be conservative. Also, keep in mind that a financial plan is ALWAYS about your goals. It’s not just about money, it’s about getting what you want out of life. Money is just the tool.