Being different to each other, we all have different opinions, goals and priorities, and different attitudes to issues like finance. Due to this, our opinions, circumstances, goals and priorities continue to change throughout our lives. Financial planning, is also something that we can not do once. Financial planning needs a regular review of our financial position and goals.
Financial planning Stage1: This stage is about tracking where you are now. What is your income, your assets, debts and expenditure? How stable is your income? Does it remain constant, or is it dependent on factors beyond your control? And what about prospects, are you in an occupation where you can reasonably expect your income to increase year on year?
Financial Planning Stage 2: The next stage is about identifying your goals which depend upon your age, circumstances and individual tastes. For example, the young will probably be concerned with purchasing their first home, the early middle-aged with paying their kids college fees, and the late middle-aged with providing sufficient retirement income.
Goals: Goals exist within different time frames. These can be short term that might be to save enough for next year’s vacation, a medium term which may be to pay off your mortgage and the longest term one may be building a decent pension fund.
Step1) Identify and write down your financial goals.
Step 2): Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals.
Step 3): Learn through a money magazine, or a book, or surf the Internet, for how to take wise decisions that will increase your net worth many times over. Then identify small, measurable steps you can take to achieve these goals, and put this action plan to work.
Step 4): Evaluate your progress by reviewing your monthly, quarterly, or at any other interval progress to determine if your program is working. If you’re not making satisfactory progress on a particular goal, re-evaluate your approach and make changes as necessary.
Finances can be improved by by saving money and investing carefully without any specific targets but it is a good idea to have some general goals.