Financial planning! That’s boring money stuff isn’t it? Many people don’t pay much attention to their finances, until something goes wrong and you can’t afford to pay a bill, or go on holiday or pay for your child’s education. That’s what financial planning is – organizing your finances so these situations don’t arise. It’s vital that you don’t just think about what is happening now, but also what might happen in the future.
It doesn’t have to be difficult or complicated. It is possible to do it yourself, but there are also companies that provide free financial advice. Here are some useful ideas on how to successfully plan for you and your family’s financial future for free.
Be realistic about your current situation
This is the most important point when planning your finances. If you are not realistic about the present state of your finances and your current commitments, then any plan you make wont work.
It’s a good idea to set up a simple spreadsheet to record all the money that comes into your household along with all the money that you have to spend out on bills and personal items. Basically anything you spend money on, make a record.
Think about your financial goals
Again, be realistic here. Of course, your goal may be to win the lottery and live in a mansion. However, realistically that’s not going to happen. So, what are your goals? Perhaps you just want to be able to afford your rent every month without worrying where the last $100 is coming from. Alternatively, perhaps you desperately need a new car or kitchen.
Don’t forget the future
When thinking about your financial goals, remember to consider what your goals for the future are, so you can start planning for them today. Perhaps you want to be able to send your child to college. Or how are you going to live when you reach retirement age? You need to be planning for these things today!
Make a financial plan
So, you now have all the information you need to make a plan. You have a list of all your income and all your outgoings. In addition, you have a list of future financial commitments and goals.
Using this information, you can create your financial plan. This should compare the money you have coming in and the money going out. You will then be able to see how much you have left over each month. This money can then allocated to your future financial commitments, say putting away $50 per month into the college fund.
Speak to a professional
Alternatively, many people like to get free financial counseling. Financial advice companies help thousands people to create a plan to suit their personal circumstances every day and are experts in their field. Whilst some companies will charge for their services, there are many who do not. This is an easy way to get a full and professional understanding of your financial situation and you will be guided and advised on how to set up your finances to plan for your future commitments.
They will also be able to advise you on dealing with existing debt.
So you see, financial planning isn’t rocket science, but is a vital tool to protect you and your loved ones from hardship, both now and in the future.