Personal Finance is basic. It really, really is. There are only a few things you need to do in order to be financially successful. And while all of these things are simple they aren’t necessarily easy.
In order for your financial life to be successful you need to have a plan. This plan outlines all the basic steps of personal finance but is designed specifically to benefit your life.
Here’s how to craft your own financial plan.
Your Financial Plan Basics
The point of creating your own financial plan is to ensure that you meet the financial goals you have. It will be one place where you can view a snapshot of your personal finances.
Here are some things you can include:
- Your Goals
- Your Current Income and Future Income Goals
- All Savings and Investment Balances
- Debt Pay off Plans
- Saving and Investing Plan
- Your Monthly Budget
How to Put it All Together
The Best Way to put everything together is to purchase a three ring binder and some divider tabs for different sections.
After that you’ll make a customized page for each section using Microsoft Word or similar program.
Goals: Use this page for motivation. List out all of your short term and long term goals and give each goal a deadline. Some examples will be paying off your credit card debt in six months, saving $50,000 for each of your children’s college educations, saving one million dollars for retirement, and so on.
The most important thing is that your goals are true to where you want to be in life.
Income: Make a page to highlight your current income, income sources, and future income, career or business aspirations.
Savings and Investments Page: Create a spreadsheet where you can record the amounts you have in savings and investments. Update your spreadsheet at least every three months so you can look at all of your balances together to see if you’re on track with your goals.
Debt Pay-Off Plans: If you have debt you need to create a page where you can record all of your debt balances. You also need to make a debt payoff plan. You can do this by using the debt snowball, debt avalanche, or something complete different.
Saving and Investing Plan: This is another page where you’re going to break down your goals into an actionable plan. Take a look at your goals and create targeted amounts of money you should be saving or investing each month in order to meet your goals.
Your Monthly Budget – This is where everything comes together! On this page make a budget that reflects all of your current monthly expenses and then add in a line item to meet your goals. If you have many goals you’re not going to be able to work on them all at once so be sure to go through them in order of importance.
A Financial Plan Will Help You Stay Organized and Motivated
Personal finance really is simple. There’s only a few things you need to know in order to be successful. The hard part about personal finance comes with the execution.
By creating a financial planning binder you’ll be able to keep all of your ideas together in a neat, organized way that’s sure to keep you on track!