What do you want out of life?
It is a question that is everytime relevant at any stage of existence. Different people will have different answers.
At the core of these answers, the idea is essentially the same; every single person desires to have a quality life. Everyone aspires to be rich because having sufficient financial resources is a ticket to the good life.So how do you become rich?
First, you need a game plan. A personal financial plan is your blue print for building your wealth. It contains two things:Your goals Some goals may be short term, others long term but it is never too early to launch planning. The earlier you begin, the sooner you’ll reach your goals. Why?Because, time is your ally in growing your money.
For now, it’s time to focus on the six steps to create a personal financial plan: Assess your current financial status:Your net worth provides a good gauge of your current financial situation.
Steps on how to determine your net worth has been discussed in the previous chapter. Formulate your financial goals:Goal setting provides the direction you need for your plan. While listing down your goals, think about the things that you truly want to achieve.
Do you want a comfortable retirement?
Do you want to move backpacking in Europe?
Do you plan to renovate your home?
How soon until your kids go to college?
In financial planning, also consider all future expenditures that you would like to make, such as buying a more efficient washing machine or a dishwasher.
Seek different courses of action to achieve those goals:Now that you’ve outlined your goals with the corresponding timeline and the amount needed to achieve these goals, it is time to think about your options in achieving your goals.
What are the methods in which you can increase your income stream? What are the strategies you can do to pay off your debts?
Your net-worth will serve as your baseline in identifying how near or far you are from your goals.Set-up and implement your action plan:Once you’ve decided on your path,implement your plan.
This step will entail tons of discipline. Sticking to your plan might be difficult at first but you’ll get accustomed to it especially when you see that you are getting closer to your goals.
Evaluate your financial plan and revise as required:As you are finally able to meet your goals and are on the way to financial success, you may want to review your financial objectives from time to time.
Certain things happen in life that may require you to change your priorities and consequently, your plans.Reviewing your financial plan from some time allows you to see where you are and what you need to do to realign yourself to life changes.
Listing down your goals is just winning half the battle to financial success.These goals must be quantified in terms of monetary value and time. Writing down your personal financial plan is a leap towards financial success.