These days, it seems there is a never ending list of things to prepare for on the road to financial freedom. Financial Planning can seem overwhelming for those with no financial background and no clear direction on where to start.
That’s why we’ve compiled a step by step process to help direct your plan.
If you’ve recently come into some money and are unsure of where to begin, look no further.
Here are four steps to consider when getting started with financial planning:
1. Take financial inventory
Before budgets and savings plans, it is important to take inventory of what you currently have.
This means earnings, assets, debts, account balances, and net worth. Everything you own and everything you owe.
This allows you to clearly see and track what you have and how much you earn, and provides a realistic outlook of your options moving forward.
2. Set clear goals
Define exactly what financial freedom looks like to you and set a plan on how to achieve it.
Whether your goal is to pay off your debt by a certain time or to purchase a home by a certain time; having a plan and a clear timeline increases the likelihood of it coming to fruition.
Once you’ve defined your goals and clarified your timeline, you can begin to make necessary sacrifices to make your dreams a reality.
3. Create a budget
Once you’ve decided what your goals are and set a timeline, the next step is to create a realistic budget.
Typically, this is the step where most people begin to feel overwhelmed as they’re faced with multiple decisions at once. From choosing to pay off your debt, to setting aside money for an emergency fund, it can be difficult to know where to allocate your money.
That’s why it is important to know what kind of budget you need to create.
Whether it’s paying off your debt, or saving towards your goals or saving towards retirement, having a clear idea of what kind of budget you need helps you better strategize, and increases your likelihood of achieving your goals by your designated timeline.
4. Allocate your funds
Once you’ve created a budget, the next step is deciding where to allocate the funds you have left. You’ll need to decide what percentage will be allocated to each goal.
This can be decided based on your timeline and based on which goal you’d like to achieve first.
You’ll need to commit to spending less money so you can properly fund all your goals.
For further assistance and questions, book a consultation with one of our certified financial experts today.