Don’t Fudge It – Stick to Your Financial Plan
“The best-laid plan of mice and men often go awry”. Robert Burns spoke the truth when he said this and understood that many hindrances in life often get in the way of good intentions.
Inevitable things happen in life such as child birth, career change, health complications and unexpected expenses that can make it difficult to stick to our plans. While some hindrances are obvious, others are undetectable. Whatever the case may be, the result is the same: the failure to meet our goals.
One plan of utmost importance irrespective of such life events is your personal financial plan.
It Helps You Gain Control over Your FinancesHave you ever taken out $50 from ATM and at the end of the day, you had no idea where it went? It’s critical to know what money is coming in, what’s going out and when.
A financial plan is the best way to harness the power of your income. If you want to buy a new HD TV, you make room for that $300 in your plan. You are in debt from a long time? List all your spending details. You get the idea.
The sad part is that people rank personal financial planning a little higher than the Black Plague. What they hardly realize is that a financial plan helps you have control over money and not letting money have control over your life. A plan is the fastest way to do whatever they want to, from getting out of long debt to taking control of money.
It Leads To a Comfortable RetirementPerhaps you never thought of “buying” your retirement. However, that is exactly what we do while putting our money into retirement nest egg. We are paying for our retirement today.
Retirement is a challenging process that needs follow-through and a careful planning. According to a non-profit group, Employee Benefit Research Institute, only 38% of employees know how much money they need for their retirement.
With the unstable economy, having enough money to survive after retirement is essential. Financial plan would help you quantify your goals. In the long run, the most important reason to have a financial plan is to have a comfortable retirement.
Provides You with Early Warning of Potential ProblemsSince financial planning shows expected results, you are forewarned of impending money problems. While planning, you get a big picture view and can recognize many potential money problems in advance where investigation and appropriate action is required.
If your child falls ill or your car breaks down, you’ll be under a lot of financial stress. At times like these, a financial plan can help you cope with the stress. An ideal personal financial plan should lead to three months of expenses set aside.
Having a personal financial plan should be a priority irrespective what your net worth is, since it identifies key areas that highlights wasted spending. It gives you an early warning of potential issues, enabling corrective action before it appears.
It Helps You Produce Extra IncomeBuilding wealth may not necessarily be a second nature to anyone, but it’s something one cannot afford to ignore. Unless you are born rich, the only way to live a comfortable financial life is to build it yourself.
We all spend money, but building wealth depends on spending less than you earn. And this is where financial planning comes in, which separates your needs from wants. Financial planning isn’t just a means to keep track of your bills and credit card statements. It also helps you manage money in a way that helps to increase your income and further give you creative ideas for investment.
If you find your income is unable to fulfill your needs, there are not many options to do about it – increase your income, perhaps by changing current employment, working part-time, or spend less.
Once you have clear picture of your expenses, it becomes easy to shift focus to aggressively building wealth and eliminating debts. In other words, you can simply increase your income by being smarter about the way you use your income.
Final ThoughtsWhen planning for a road trip, do you put on a blindfold and drive? No. When you are spending without a financial plan, basically you’re driving blind. A financial plan is not a dungeon to keep you away from your money but a tool to make sure your future is well and richer.
Getting your finances right isn’t something that can be done overnight but working out is an important first step. It’s all about keeping an eye on the big picture while paying attention to minute details. You are sure to make mistakes along the way but sticking to your plan will pay off in the long run.
If you take time to create a plan, do your best to stick to it.
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