When it comes to setting and accomplishing your financial goals, no two plans are the same. Financial planning is never one-size-fits-all. You want to be sure that your personal and professional goals are aligned and secure enough to persevere long-term, but also still flexible enough to readjust as your needs change in the future. Your goal may be to build an investment portfolio, plan for retirement, or both. No matter what your personal, financial aspirations are, here are a few measures to take to ensure your plan is solid.
Step 1: Decide Where You Want to Be
There is a saying that goes “you can’t know where you’re going, until you know where you want to end up…” Well maybe it doesn’t go exactly like that, but when considering your financial plan you must know exactly where you would like to be by deciding what your plan will accomplish in the future. Set various short-term financial goals and use them as milestones to keep yourself accountable.
Step 2: Save Your Money
This actually should have been Step One. There is no way that you can plan for and invest something that you do not yet have. Take a look at your income. How much can you afford to put to the side, comfortably? Determine a percentage or fixed amount of your weekly or monthly income to allocate towards your financial future. This will be one of your most crucial steps in pursuing your goals.
Step 3: Get Out of Debt and Keep an Eye on Your Credit
If you have any credit card debt or bills you have not yet satisfied, be sure to pay off or paydown these balances before investing any money into your plan. High balances on your credit cards and other unpaid loans or bills can be detrimental to your credit and affect your ability to plan your financial goals effectively. Creating a financial plan consists of proper budgeting and keeping up with payment obligations. Not only does doing this well help increase your credit score and overall financial standing, but it will also make good practice for keeping up with your created plan.
Step 4: Write Your Goals Down
“What gets measured gets done.” Continuously managing your financial plan along the way will be a lot easier if you are able to see and observe it at any given moment. Refer back to your plan occasionally to make sure that you are accomplishing your milestones and that your plan is still congruent with your present situation at the time. Depending on what your short-term goals are, checking your progress monthly or quarterly should suffice, and semi-annually or annually for the more lengthier goals.
Step 5: Have an Exit Strategy
What are some of the goals that you would like to reach with your financial plan and at what point in the future? As each goal is attained, you will need to have a plan on how to execute that goal without it becoming at the expense of the others. For instance, if one of your goals is to purchase that new car you have been saving up for, at what point will you take funds from your portfolio to make the purchase? Will you use part of your savings and finance the rest? Be cautious to keep checks and balances on your plan as you move along to ensure its longevity.
Creating your own financial plan can be both exciting and rewarding. But every plan is only as good as its executioner. Implementing your plan is key. Deciding early on what you would like to get out of your plan will help you to determine what exactly must be contributed towards it. Keep track as you progress, and you will be well on your way to achieving your financial goals!
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