Financial planning can provide you with a direction for your finances. This planning can be implemented in personal, professional and organizational spheres. There is a lot of uncertainty in the economy in general nowadays, and that is why proper planning and implementation can help to avoid a crisis situation.
According to financial planner David Loughnan from Elements Financial Brisbane a proper financial plan requires the setting up of both short-term and long-term goals which can then enable you to take the right decisions that can affect your finances. A short-term goal can include things like reducing your credit card overdues, while a long-term plan may be the acquiring of assets like a home, sending children to college, or planning for your retirement.
To make any financial plan, it is important to know exactly where you are at present, financially. What are your assets, what liabilities do you have, what are your sources of income and most importantly what are the expenses that you do have to incur. Any financial plan will have to make provision for some contingencies like job loss, taxes, accidents, ill health and others that can become potholes on your road to financial soundness. This means that you will have to have adequate insurance to guard against these roadblocks. These premiums or other arrangements that you make will have to be part of your expenses and a vital part of your financial plan.
No financial planning can be successful unless you discipline yourself to learning how to live well within your means. Stop the use of credit cards to acquire things that are not very essential, like a new laptop or the latest model stereo system. Use your cards as a substitute for cash for your essential daily needs, but not for luxuries and non-essentials. Taxes are as inevitable as death, and your plan must always ensure that you are completely compliant with the laws and never land up in any problem because you have cut corners.
Every financial plan must always include the making of provisions for your long-term financial independence. It is prudent to keep aside your savings on a regular basis and allow them to build up so that you can invest for the future. There is no dearth of financial instruments available that allow you to do this, and many of them come with substantial tax benefits. Create emergency funds which you can invest in assets that allow for immediate liquidation.
Once you have made a financial plan, you will need to review it and monitor it regularly. Do so especially when there is a change in your finances, like an increase in income, unexpected things like accidents or illnesses, or even changes in overall economic conditions. Make changes if you think they are warranted, but always try to see that your long-term goals are never affected, and even if they are, see if you can see your way to come back on track as quickly as possible.
Financial planning can leave behind the uncertainties in your life and allow you to be prepared for the worst that life can throw at you. You will learn how to roll with the punches and come up fighting and in good condition, even in the direst of situations.