Creating a Financial Plan for Your Future
Financial planning is important to ensuring a secure future. The benefits of having a well-planned financial future include having the ability to maintain the lifestyle you want, afford luxuries and build a portfolio of investments. To create a financial plan, you should: assess your financial situation, define your goals, create a budget, manage your debt, build an emergency fund, save and invest, plan for retirement, manage risk and seek professional advice. Doing this helps you to make your strategy come to life and manage your and any family’s financial needs.
Assess Your Financial Situation
When assessing your financial situation you should build a list of all your income, expenses and any assets and/or debt. This will help you manage your financial aspirations and responsibilities and plan ahead.
Define Your Goals
Having a detailed knowledge of what you want to achieve with your money is fundamental to assuring a strong financial future. Build a list of your goals and what they cost and calculate how long it will take you reach them. This is a surefire way to stronghold your plans and make them happen.
Create a Budget
It’s a good idea to run some calculations to determine how much you spend on everyday necessities. This will grant knowledge of your potential savings and how fast you can achieve your financial goals.
Manage Your Debt
If you have outstanding debt from any credit cards, personal loans, home loans or student fees you have, it’s a good idea to add it together and work out how much your regular payments cost. Factor this into your budget to give yourself potential to save and plan.
Build an Emergency Fund
This step is especially important if you have a family you have responsibilities towards. Saving money for a rainy day is crucial because life throws us all sorts of curve balls and these can require financial remuneration which can be difficult to manage if you are not prepared. Medical bills, unexpected utility bills, education bills, vehicle bills and holidays can pop up at any time and cost you exorbitantly.
Save and Invest
Following calculation of your budget, factoring in any debts and obligations to maintain an emergency fund, you should have a rounded idea of what you are able to save each pay cycle. With this money you can also invest in assets that will grow you wealth.
Plan for Retirement
Planning for retirement is easier in Australia than most countries because of the mandatory 11% annual contribution to superannuation. This makes it easy to calculate how much you will have in your golden years and adjust your contributions accordingly based on your desired lifestyle and financial responsibilities.
Insurance should be an increasingly prioritised expense as you age. Health and life insurance, vehicle insurance and home and contents insurance as well as (potentially) income protection insurance and asset insurance will require consideration when budgeting, saving and investing and planning for retirement.
Seek Professional Advice
If you need assistance with any part of the strategy outlined above, please contact Pillar Financial to discuss your personal situation and how we can help you achieve your financial plan.