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Personal Financial Plan

A personal financial plan is a useful and essential tool for all of us. If you don’t know where you are going, you are lost. This applies to all areas of your life. Some people actually don’t even know their current financial state. This is where we start with drawing our plan.

Set Goals

Set personal financial plan goals, write them down and commit to achieving them. Your goals should be detailed and achievable. An example of a goal would be to finish paying for your home in five years time, save $20000 towards your children’s education in ten years time, etc. Your goals should have time frames attached to them.

Current Financial State

If you are like an average person, you don’t know where your latest bank statement is. Don’t worry; it is the last time that happens to you. Get the details of all your financials. What you owe and what you are owed. Try to remember every little detail like the loan you got from your aunt and the one you gave to your brother.

Your assets will help you identify flaws in your current state and help you draw a positive personal financial plan . Look at all your assets and put value to each. Your home, car, furniture, crockery, appliances, etc. this will give you an idea of what you own. Your liabilities will be the amount of money you owe on each of the assets you have already listed. This should also include any other debts we have. Your net worth is a difference between your assets and your liabilities, which I hope is positive.

Debt Plan

The most difficult part is probably getting out of debt. It is not impossible but takes a while. From your monthly costs you can always get some cash. Check from the junk food budget, clothing, etc. You are better off cooking your meals, taking lunch to work and not getting a new suit every month. Please get our “debt plan”.

Savings Plan

With a good monthly or weekly budget, you will have plenty of money to save after getting out of debt. An emergency fund is a must for every household. Some make it a 3 or 6 months worth of their salaries. This money should be in a low risk and liquid account. I love the money market. If you were to lose your job, you will have money keeping you going for a couple of months. This will give you enough time to get another job or to make your business work.

Investment Plan

You may now start creating your wealth. There are a number of investment tools that you can choose from. I have used the real estate as an investment of choice whilst my husband is happy with securities and all those complex terms. Investing in shares is actually easier than we all think. Just get a good book to teach you in simple terms, how to be your own broker. A friend of mine started that way and is now quite comfortable and trusts her instinct when it comes to the right time to buy and sell.

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