Imagine not worrying about your finances because you have taken the time to develop a long term financial plan. Imagine the feeling of your money and your life being in alignment with your core values. Imagine knowing you are on track to reach your financial goals. Once you have created your personal financial plan, you'll no longer need to imagine. Having a financial plan will provide you the guidance and self-confidence you need in order to make smart and responsible financial life decisions today. It’s a personal financial roadmap to your future and how you turn your dreams and goals into reality.
Developing a personal financial plan offers you an abundance of benefits. At the top of the list for many is peace of mind. It’s when you feel the sense of accomplishment by reaching your long range goals that you’re able to look back and see the remarkable and powerful benefits having a financial plan has brought to your life - and with that comes peace of mind.
Keeping in mind that financial planning is a continuous life-long process and that a financial plan itself is but one tool to use, below are some of the many benefits you can receive when you invest the time, energy and money to develop your own personal financial plan.
Evaluate Your Financial ConditionFirst of all you need to evaluate your current financial condition by which you can get an idea of your financial goals. List the income and expenses and manage them on monthly basis.
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Make a BudgetThe main pillar of personal finance is budgeting. Make a So practical and reasonable budget, which includes your all your income sources as well as your expenses. While listing your income sources, your must include all the major sources like – salary, alimony, child support etc. On the other hand, While listing your expenses, you must include all your monthly bills and obligations. Then equate the income against the expenses to analyze the result and cut down some unnecessary expenses like – cable connection, subscription of expensive magazines, going outside of a movie , dining out etc. if necessary. Then contribute the saved money towards the daily expenses and debts.
Earn Profit from Investment PlansWith the help of right financial planning, you will come to know the proper way to invest and get maximum profit. You can invest in stock, bonds, real estate, forex etc. but real estate is the most beneficial among them because real estate investment is a booming market.
Decrease the Impact of EmergenciesYou’ll have to create an emergency account to help your loved one’s in their financial emergencies. If you will maintain an emergency account, you’ll not have to go outside to borrow money from others. However, handling your finances ensures that you can survive from these emergencies all by yourself.
More Freedom to ActWhen you manage your finances well, you often have the freedom to do things that you want to do. Always dreamed of visiting that foreign country? Want to splurge on the latest, expensive piece of technology to hit the markets? Unless you are wildly rich, big price items like these things all take time and good personal finance planning. But planning grants you freedom on a smaller scale, too; you will be able to spend money during out an outing with friends or take small weekend trips without having to wonder whether or not they will bust the bank. Because you can include them in your financial plans, you will know they won't, so long as you keep to your budget. You are free to do what you want (within reason and your financial calendar).
More Likely to Stay Out of DebtSometimes, the urge to spend is overwhelming. You know you shouldn't do buy that extra item – you don't have enough in your bank account and the money from your check is already allocated towards other things, but you just have to have it. And sometimes, it's not a question of want at all, but rather of need – you need your car functional to get to work, you need to pay your rent, you need to put food on the table. One way or the other, it is easy to slide into debt. Debt, in turn, can cause a lot of stress and daily drama that you simply do not need. People who opt to engage in personal finance planning have a better idea of how much they can spend, what their future needs are and are less likely in general to fall into debt. That's an advantage not only for your credit but also for your hair – you won't have to spend so much time pulling it out.
More SecurityHectic, worrisome economic times are just plain scary. Why? Well, for one, Social Security is increasingly at risk (every generation is projected to get less and less) so that when you finally need to stop working there's a good chance you will be given only a small amount of money back to live on – if you get anything at all. This means you could potentially have to spend the final decades of your life scrimping and saving just to get by. And in the meantime, you have to wonder how secure your employment is. If the economy takes another downturn, the unfortunate fact is that some people will be laid off. If you haven't been engaging in personal finance planning, there's a strong possibility you don't have the funds to support yourself and your family until you can find a new job. Personal finance planning gives you the advantage of not having to worry about situations like these, because it prepares you for them, in advance.
Make a Better FutureGood financial planning safeguards your future against any unforeseen situations. As planning involves saving almost 10 % of what you earn every month, you save enough to meet any emergency. Thus, you do not have to go into debt incase a financial emergency arises. Financial planning also give you some importance to retirement planning. It will ensure that you have a better retired life and you do not have to worry much about your expenses. You are to contribute towards a retirement plan so that your after retirement years are safe and you are financially secured.
Maintain Your DebtFirst, make a list of all the debts owed and payments you have to make and prioritize them while listing. Pay off the smallest balance on debt first and once it is paid, then move on to the higher level. This is called debt snowball method which is very popular among people.
If you don’t have a written personal financial plan for you and your family yet, We urge you to create one now that the kids are back in school and summer is over. You’ll sleep better at night and are more likely to get to your life goals with a written plan.