Financial planning is a crucial component of your long-term financial success. It is virtually impossible to achieve financial success without a plan.
How do I begin to develop a financial plan?
Start by analyzing your income and your expenses. Once you have listed your income versus what your expenses are, you’ve begun your path to financial planning! The key is in being honest with yourself about expenses. We are often tempted to make unnecessary expenses. This is where financial planning becomes a valuable tool. It helps us establish clear limits and optimize our purchases based on our needs, our income and our savings.
Is creating a budget an important part of a financial plan?
A budget is ‘the’ crucial part of a sound financial plan. Actually, the real secret of successful financial planning is establishing a budget and sticking to it. It may stop some short-term purchases you may desire, but it creates a clearer path to long-term financial success, preparing us to be prepared for unforeseen events and changes in our lives, all while reducing financial stress.
In addition, it provides us with control by knowing our income, expenses and savings, which helps us make more informed decisions.
Conclusion
Financial planning sounds daunting, but it isn’t. Start with a budget that allows you to see your true current income and lists your expenses. Once you have that, you can use many online tools to help guide you with additional steps. The key is…to start with a budget!