When most people hear the words “financial plan” their eyes glaze over and roll back into the back of their heads. Usually, talking planning, and money, and finances, is the last thing folks want to do after a long days work. But, in this day in age, establishing a firm, realistic financial plan is not only a good idea, its pretty much a must-have as far as implementing, and planning for the type of life you wish to have.
Lets cover the basics. At its core, a financial plan is a working document that lays out a fixed set of goals, then establishes a pathway, or guide, in order to tactically take you from Point A to Point B.
Most people associate financial planning with retirement, but to be realistic, it can be encompass college planning, business planning, and estate planning as well.
There are a few basics that must be met in order to arrive at a workable financial plan.
First, you need to be realistic. Second, you have to have a realistic and coherent goal in mind. Third, you have to be willing to stick to the plan. You may also consider consulting with a financial advisor, or a financial advisory firm such as Mirador Wealth if you’re looking for outside advice on financial planning.
After you have arrived and made your peace with these things, the simplest way to start is to establish a budget. Figure out where your money is going on a monthly basis. Where are you spending, what are you spending money on, and where can you save money.
Once you have this figured out, look at your investments. How are they situated currently, and are they appropriate for the end goal that you have in mind. The only way you can decide if it is or not is to clearly define your end goal.
After this step is complete, take a time out and do some thinking. Realistically, where do you stand today. Are you standing on solid ground and close to where you need to be? Or are you in drastic need of an overhaul? Either place is find, as long as you accept it and are committed to improving it.
Lastly, commit to reevaluating your plan every so often. Six months is a good rule of thumb when you are just starting out. Once you do this a few times, you have a good measuring stick as far as where you need to be. As you progress forward, you can begin to add in more sophisticated measures of financial planning like insurance optimization, estate planning, and passing money on to your heirs via gifts or charitable giving.