What is financial planning?
Planning is bringing the future into the present so that you can do something about it now
– Alan Lakein
A financial plan is simply a blueprint to help you build, grow, and protect your family’s assets in order to achieve your financial goals. It helps you decide what your short-term and long-term financial goals are going to be and how to go about achieving them. Planning well safeguards not only your future but also that of your loved ones, giving you peace of mind.
Achieving a plan requires discipline! You can do this by having a budget that helps you track your spending as well as monitor your progress on savings. This enables you to gain visibility into your finances way into the future. Most importantly, it does give you peace of mind in knowing where you are going and seeing yourself make real progress.
To develop your financial plan, assess your financial situation objectively and honestly! This will enable you to have a firm baseline to plan from and to measure your progress from. Once this is clear, dream on! What is it you would like to achieve? By having clarity of goals and financial situation, you can then put in place a practical plan of action. Having a plan is one thing – executing the plan is the ultimate objective! Put the plan into action in a disciplined manner, for example, put money aside on a monthly basis towards achieving a certain goal like saving for college fees or saving for a deposit towards a mortgage.
There will always be show stoppers on the way – that is life! An illness, a job loss, an accident, a burglary, a civil suit against you or a fire in your home. All these things could derail your well thought out plan and throw it into total disarray. It is therefore important to manage these risks that may interfere or stop you from executing your plan of action by arranging the right protection or insurances.
The changes you encounter in life will affect your financial situation and needs which means that you have to review and shift your plan regularly so that you are able to serve the immediate needs at any one time while keeping the focus on where you want to be in the future.