Planning your finances is just like making a roadmap for a trip — although there are many alternate routes, there is only one destination and that destination is your financial goal. Creating a financial roadmap for your life will help keep your vision clear and keep you on track so you can achieve financial success.
Have A Wealth Vision
Before you can begin designing your own financial roadmap, you should know exactly what your end goal is. Wealth expert Steve Down suggests writing down and describing your wealth vision in order to create wealth in your heart and mind that will help you achieve what you want financially. This way, even if the road to your goal gets bumpy, you will still know exactly where you’re headed.
Plan Your Route
Consider your current financial standing and create a timeframe for your goal. Your goal can either be short term or long term. You have to consider your salary and be realistic about the timeframe. If your goal seems too unattainable, you will lose your motivation to stick to your financial plan. Take note of your progress toward your financial destination and review your goal if you need motivation.
Along the way, you may find that your original plan will not work soon enough to achieve your goals. Don’t be afraid to take alternate routes. Get more education if necessary or try another investing strategy. Just be sure that the new route you take can be incorporated into your ultimate financial plan and still help you fulfill your wealth vision.
Now that you have a plan, be responsible and stick to it. Manage your finances well because every financial choice you make can have an impact on your future goal. Pay your bills on time and avoid spending money on unnecessary things especially if you don’t have a budget for it. Use your credit card less to avoid spending money you don’t have. Budget your finances and designate an amount for spending, for investing, and for saving. You can follow the 70-20-10 rule to help you achieve your short term and long term goals. In the 70-20-10 rule, 70 percent of your salary goes to living expenses, 20 percent goes to savings, and 10 percent goes to debts and loans.
Pay Yourself First
Paying yourself first doesn’t mean you should buy something you want before paying for anything else. It means that you should put money into your savings or investments first before paying for bills, debts, or loans and then budget the remaining money for your living expenses. Usually, people pay their bills first, and then spend the rest on living expenses and wants. They only put money into their savings if there’s anything left by the next payday. By paying yourself first, you’re less likely to buy unnecessary items and more likely to achieve your financial goals on time.
Be Financially Literate
To efficiently manage your finances, you need to be financially literate, at least to a certain degree. You need to understand your credit report and how tax works. You should know how to invest and what to invest in. This way, you’ll be able to make smarter decisions about your finances and you’ll avoid making costly mistakes. Being financially literate will ultimately help you fulfill your wealth vision within the timeframe you’ve set.
Financial planning is very important at every stage of your life. Whether you’re saving up to buy an item or saving up for retirement, it is important to have a reliable financial plan in order to achieve your goals. Having a sound financial roadmap will guide you and help you reach your wealth vision on time.