Your financial well being solely lies on you. It’s your personal responsibility to make sure that your finances work for you. This goes along with the discipline you set forth in attaining your financial stability.
Financial Plan is not something that stays on the paper, but your day to day commitment. I will be breaking down steps on how to build a Solid Financial Plan, one that will assist you in becoming financial independent.
1. What are your Financial goals?
Your financial goals is the definer of your success. Financial goals are the things you want to achieve and they are in line with your financial stability. It’s okay to have goals that are big and far from your current financial reality, what matters is what are the steps you need to take to achieve your goals, break them bit by bit and with a plan on how to achieve them from your current situation with the resources you have.
Prioritized your plans and goals, make sure you know what you want to achieve, and what it takes to achieve them. Remember, financial goals is the rock of your success.
Life is so unpredictable, storms usually comes mostly in the least time we expect them. To be wise about emergencies, wisdom calls on creating a fund account to take care of the emergency. This will help you from interfering with your plan, since some of emergencies are so demanding and unavoidable that can cause you to use you to deter from your goals.
3. Pay of your Debts
It’s not realistic to save when you having debt. With the current interest charges which are always higher than the interest earned on savings, there is no way you will balance that equation.
On paying your debts, it’s also wise to build a plan on how to settle them. Start with the one which is most urgent, ones with high interest or basing on your own understanding on how you can manage your debts without it affecting your finances. After developing a plan, stick to it patiently until you’re debt free.
Your money should be able to create more money for you. Investing your money is one way of avoiding living from hand to mouth.
Before investing make a good research of the kind of investment you want to venture in, what are the risks involved? In case things doesn’t go well, will you be able to stand again?
Look at your long term and short term needs, and see how to invest your money without affecting your finances. It’s advised that you go for long term investment cause of the yields plus it will build in you the character of something called financial discipline.
Don’t confuse your savings to investment, remember your emergency fund should be there to caution you from storms, when you have invested your money.
5. Get the Right Insurance
Most of African countries people haven’t realized this secret. Having an insurance is one way of covering your self from unavoidable situations which are unforeseen. One of the basic insurance is the Health Insurance, Pension, Education and much more.
Remember, your contributions to the various insurance companies should be in monthly basis in line with when you earning your salaries.
Be wise, don’t go just for any kind of insurance provider, it’s good to do a research, get quotations and compare and settle for the one that is in line with your finances and needs.
6. Review your plan frequently
Once you have your financial plan outlined and you actually started to actualize it, it’s important to review your plan frequently and make the necessary adjustments if your goals or the circumstances around your life change. For instance, maybe your insurance needs to change, your risk tolerance changes or you get married or have kids. Or even you you got a pay rise or even your investment paid off.
Adjust your plan to be more realistic and achievable as days go by.
All the above six steps are useless if you don’t have discipline in your finances. Make a commitment to grow today!