Financial Planning

A financial plan is a comprehensive evaluation of someones current and future financial state by using currently known variables to predict future cash flows, asset values and withdrawal plans. Most people work in conjunction with a financial planner and use current net worth, tax liabilities, asset allocation, and future retirement and estate plans in developing financial plans.

It is very important to have a financial plan for different stages of the family life cycle or for life events. When you fail to plan, you plan to fail. The different stages in reference to consider having a financial plan are:

  • getting married or living together
  • separation or divorce
  • having children
  • personal or family illness or disability
  • buying a home
  • retirement
  • sending children to college
  • losing a job
  • death of a partner or family member

Their are different elements to a Financial Plan which is pretty imperative to ensure success.

  1. Financial goals –  A financial plan is based on an individual’s or a family’s clearly defined financial goals, including funding a college education for the children, buying a larger home, starting a business, retiring on time or leaving a legacy. Financial goals should be quantified and set to milestones for tracking.
  2. Personal net worth statement – A snapshot of assets and liabilities serves as a benchmark for measuring progress towards financial goals. This also comes in handy when applying for any type of lending.
  3. Cash flow analysis –  An income and spending plan determines how much can be set aside for debt repayment, savings and investing each month. This information can be gathered from your monthly budget.
  4. Retirement strategy –The plan should include a strategy for achieving retirement independent of other financial priorities.

In order to get your finances in order, and achieve those goals you have to have discipline. You also have to be realistic. Don’t go based upon someone else timeline. Your success is based upon, the things that are attainable to you. And if at first you don’t succeed, dust yourself off and try again. 😊

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