Financial planning is beneficial for everyone, no matter how much money you make or your economic status. You don’t have to make a lot of money in order to enjoy the benefits of financial planning. The earlier you take a close look at your finances, the better off you’ll be far into the future.
Here’s what you need to know about financial planning as well as tips to get started.
Financial Planning 101
Financial planning isn’t a one and done process. Instead, it’s an ongoing part of life that ensures you can comfortably support your financial needs while also preparing yourself for retirement. The process involves many factors; including your income level, expenses, and your goals.
Many people who are new to financial planning seek expertise and direction from a financial advisor. Financial advisors are a great resource for helping you to determine how much money you need to reach your goals while also helping you to create a path to meet them. These professionals can even manage your investment accounts. This less stress on your part!
To ensure your money and financial health is in good hands, you want to research an advisor before ultimately choosing one. You can use the Careful Cents site to compare the best financial advisors in Tampa.
With thorough financial planning, you can have peace of mind that your money is working for you. With a roadmap of your finances, you can create a solid financial foundation that will serve you well for years to come.
The Benefits of Financial Planning
Financial planning won’t make you rich overnight, but what it will do is allow you to develop a plan that enables you to make smart financial decisions. Without financial planning, you’ll be stuck wasting money on interest charges and frivolous spending, both of which can impact your financial stability for years to come.
There are endless benefits in taking the time to plan your finances. Some of the best benefits include:
- Building financial confidence
- Being able to boost your savings
- Having financial peace of mind
- Making it easier to maintain or increase your standard of living
- Planning for the future and retirement
Now that you know what financial planning is and why it’s so beneficial, the next step is to put everything together. Financial planning is something that you can start at any time. But the sooner you start, the sooner you can begin to improve your financial situation.
How to Get Started
What’s great about financial planning is that it isn’t hard. No matter if you’re working with a financial advisor or doing all of the planning on your own, it’s not rocket science!
Know Your Goals
One of the first things you’ll want to do is to think about your life goals and what they cost. For example, maybe you want to buy a home, have kids, or retire early. These are all life events that cost money.
In order to turn these plans into something tangible, you have to plan for them! Buying a house means not only figuring out how much mortgage you can comfortably afford, but it also means saving up money for a down payment and building an emergency fund in the event of a large household expense.
By taking the time to plan your finances, you can determine how much income you’re going to need in order to meet each of these goals.
Track Income & Expenses
Once you’ve identified your financial goals, the next step is to examine your income and your expenses. First, figure out your net worth. This includes cash, investments, and other owned assets, such as a home. Then you’ll want to look at your expenses. Figure out how much cash you have coming in compared to how much is going out.
Take a look at your weekly and overall monthly expenses. Pinpoint where your money is spent. To make tracking all of these numbers a little easier, consider using budgeting apps such as Mint, Goodbudget, and Tiller.
Map It Out
Now that you have your goals and your financial data mapped out, the next step is to put everything together. Compare your goals with your net worth, income, and expenses. While you may not have the income to meet all of your goals right now, remember that financial planning is all about comparing where you are financially now to where you want to be in the future.
The next step is to create short-term and long-term plans. This includes creating a budget, reducing debt, and investing your money. As you meet financial goals, always create new ones! Remember, financial planning is a life-long effort. There’s always something that you can strive for financially, even as you entire your retirement years.
Financial independence and security don’t come without years of planning, budgeting, and smart decisions. No matter where you are in life, it’s never too late to reap the benefits of financial planning. Follow these tips so that you too can work towards a more sound financial health.Google+