How can you get your Financial Plan

Getting started on your own financial plan 

a money management tool for individuals. What is it all about and how to get your own financial plan going? Read on to know it all...

  • What is a financial plan? 
  • What is the need?

Well, our financial resources in life are limited and the demands on it, almost infinite. The limited resources are to be utilized judiciously to achieve the maximum that we desire from life. A financial plan is in part a reality check on your current financial position and in part a road map to where you want to reach. In short, it acts as a bridge connecting your present and future, reality and dream. Without a well thought out plan, your finances face the risk of going haphazard with no aim... 

What information do I need for a financial plan?

A financial plan needs information about your current financial situation. Start by gathering as much of your financial information as you can. Estimate anything you don't know, and update the figures later. To start with, you will need information on:

  • What you own (your assets)
  • What you owe (your debts or liabilities)
  • What you make (your income)
  • What you spend (your expenses)
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What does a financial plan look like?

The form that a financial plan takes will vary, depending on your needs, the type of plan and the style of the person who prepares it. But most personal financial plans will include these parts:

  • your goals
  • your net worth (your assets minus your debts)
  • your current income and expenses
  • costs and timelines for your goals
  • financial steps needed to achieve your goals (this could include a variety of items, such as savings, investments, insurance and an estate plan).

Financial review

A plan is only useful if it is realistic. Your ideas may change or the facts that they are based on may change. Your plan will be stronger if you think ahead about problems that could come up, and how to manage them.

  • Lost your job? Your emergency fund will help with expenses.
  • Unexpected health expenses? Extended health insurance may cover the costs.
  • Didn’t make your savings goal this year? Put off the big-screen TV for another year.
Summary of key messages
  • A good financial plan is the start to managing your money to achieve your goals.
  • A financial plan starts with accurate information about what you own, what you owe, what you make and what you spend, insurance, income taxes and estate planning.
  • A well organized planning tool makes it easier to develop your plan and keep it up-to-date.
  • A financial plan is a living document—it changes as your personal circumstances and your goals change, so you have to monitor and update it regularly.

“Once you know how much you need to save and how long you have to save it, you can set a monthly savings goal. ”