One complaint I often hear is that an individual would like to invest but they do not have any money. Financial planning may help many people to overcome this lack of ability to save for investment. With proper planning perhaps you will be able to establish goals and save money to meet these goals. While you can start this personal financial planning yourself, you may soon discover that it will pay you to find a Certified Financial Planner to help in the process.
This article gives a short primer on how to start personal financial planning for yourself.
Financial Planning Process
Contents
Set Financial Goals
To begin the financial planning process, you need specific financial goals. By specific goals, I mean to establish a date to meet the goal and a savings plan that meets your goals. At first these goals may seem unobtainable but continuing the planning process will enable you to evaluate these goals and modify as necessary.
Track Your Income & Expenses
Next you need to track your expenses and income until you can develop a yearly statement (cash/flow statement). To see where you are currently, list the value of all your assets and what you owe. Subtract your debts from your assets and you have your current net worth (balance sheet). You should update these statements yearly.
Develop a Budget
Once you have established your income and expenses you can develop a budget. Your aim in establishing a budget is to attempt to increase your income and/or reduce your expenditures so that you have savings to meet your initial goals. If on the first try you are short of funds, do not despair.
Find a Financial Planner
Try looking at your taxes to see if they can be reduced. Consult a tax attorney if necessary. Analyze your debt to see if it can be consolidated into a lower interest rate loan. Perhaps a home equity loan might fit the bill. Next review your consumption patterns. Are your financial goals worth driving an older automobile; are you shopping for the best prices; and what current expenses that you have are unnecessary?
By getting your finances in order, you will gain funds to save and invest toward your goals. If you do not have sufficient funds to meet your goals, modify them. Look for opportunities in the future to reestablish these goals. Seek the aid of financial professionals, educate yourself with personal finance books and magazines.
Article Credits:
Contributed-By: James E. Mallett