The pandemic may have discouraged us at some point in our life, but we have a choice to do our best to survive. Do you want to be financially free and be able to sleep at night with peace of mind? Then making a solid plan for your finances is what you need to work on. This might sound so familiar and yet not everyone has understood its value. But first, we need to know what financial planning is.
What is financial planning
A financial plan creates a specific direction and records for your money and helps you achieve your goals. Yes, it is possible. Financial planning can be done on your own, however, you may also seek a professional help if you are not confident enough on this matter. You need to worry no more because there are many ways to make it happen.
Financial planning help establish our goals, be it a short term or long-term financial goals. With this, we can create realistic plans to meet what we envision in life. Coming up with strategies that we are ready and totally decided to commit on, totally make it workable.
At the same time, financial planning is a process, a continuing process that requires patience, focus and even change of heart. Gone are the days where you buy whatever you want, whenever you want or wherever you want. An alteration on lifestyle is also one of the keys.
Unfortunately, without a financial plan, there are less chances of getting yourself out of debt and a sure recipe to future disaster.
It is a cliché that only the wealthy practices financial planning. It can be done by anyone who’s willing and committed to do so. Since financial planning is an ongoing process, even an average earning individual can surely progress by following a certain solid financial plan.
How to create a financial plan
1. Set financial goals
This is the first key ingredient. Start with what you want to achieve. Like, for your child’s education, car, mortgage, getting a new house, paying off debts, retirement funds and emergency funds. You’ll need to pull out your calculator and calendar to work on this one.
Budgeting as part of financial planning gives you a clear account of your spending. It will not hurt as long as you know your priority.
2. Create generating income
How to possibly reach a financial goal if there’s no income coming in? You need to find ways to make money. One source is having a fix salary, this can bring you to places. If you are married and your husband has a stable job, you can also make money as a wife who stays at home. Home-based jobs are now very much available. Getting part-time jobs or doing small businesses in between. Creating new income steams can help you big time reaching your goal. And starting your own business that you really love can be considered as well.
3. Manage debts
This thing causes our sleepless nights. Make it a goal to clear your debts. Because if you don’t, it will haunt you not only at night, but even at broad daylight. Because as time goes by, the interest goes higher and higher until you’ll find yourself into serious debt. As much as possible, do not get into loans if you have no sure source of income to sustain monthly obligation. You should be aware of debt consolidation to help you manage your debt.
4. Get into investment and save
Yes, not putting all your eggs in one basket as what they say. Get to invest on your insurance, stock market, real estate and more. Putting your money to different ventures can give you some assurance of profits in different ways.
It’s also wise to invest on your relationship. Instead of spending money on stuff, treating your family or an old friend is a good form of investment as well.
5. Stop your unnecessary spending
The crazy midnight SALE, payday SALE, black Friday SALE, moving out SALE, etc. These are now the common culprit to serious financial debt. Do not accumulate stuff that will not only eat up your space at home but can also cause you so much distress. Make it a point to buy things that you definitely need. Because we tend to buy things that we just want but we do not eve really need. Cut off your credit cards if you can’t control your spending habit.
Plan your trips or travels, unplanned activities can cause you a lot and can affect your budget. Occasional dining out will not hurt but home-cooking is the best and saves you a lot.
6. Prepare for retirement
You surely do not want to just go to a regular job 5 days a week as you reach a certain point in your life where you already want to just enjoy life. Starting your retirement planning as early as 25 years old is a good idea to work on.
7. Review your plans regularly
Just like a student, reviewing is a constant activity that they are required to do. We adults are not excused to this. Our financial status should get enough attention to see if you are right on track with your financial plans and goals.
You may start to sit down with your partner or your family members and review your 5 years or 10 years financial humps and bumps. This way you can have an idea if you need to do a little adjustment to your plans.
It takes a lot of courage, discipline and commitment to work on a solid financial plan especially in this trying time. The pandemic may have brought us so much struggles and uncertainties, but we have a faithful God who sees us through. Take a moment of your time to think about this. Planning and executing your plan need a lot of faith as well. You have a choice.