Many people think financial planning is really only for those people who have an awful lot of money that needs to be managed. That, however, is not the case, everyone – individuals, couples and families – can benefit from a financial plan, even if their income is relatively low.
Creating a financial plan does take a little time and actually sticking to it a little more. So, as busy as you are why should you bother, especially if you are ‘getting by’ right now? Here are ten very good reasons why you should make the effort to create a financial plan:
It Will Help You Define Your Financial Goals
Everyone has financial goals, whether they relate to saving for a down payment on a first home, affording to start a family or taking that holiday of a lifetime. During the process of financial planning, you are going to be asked to define what those goals and to prioritize them. Once they are all down on paper you will already be one step closer to achieving them.
It Will Help You Determine How Realistic Your Financial Goals Are
Once your financial goals have been defined it will be time to start thinking about just how you can achieve them and how long it might take. During this part of the process, many people discover that they actually have more goals and dreams than they do financial resources and as disappointing as delaying some of them might be the goal of financial planning is to set a realistic plan that you can stick to, not one that is impossible to achieve.
It Will Help You Rein In Your Spending
Once you have determined just what you are aiming for and how long it is likely to take to achieve your financial goals the next step will be to take a long hard look at just what you are spending now and how that can be changed, especially if, like many, you actually spend more than you earn. Many people are surprised, when their spending habits are laid out in black and white, by just how much money they are wasting.
It Will Highlight Your Current Mistakes
Never given a second thought to just how much that take away breakfast before work really costs on a monthly basis? When it is laid out in front of you, chances are you are going to be surprised. ‘Little’ expenses like this really do add up, and the financial planning process will expose that, allowing you to rethink all of those non-essential spending habits you never pay much mind to.
You’ll Be Able to Measure Your Progress
Once a financial plan is in place it should contain measurable goals, such as contributing X amount a month to a savings account or paying Y amount on a credit card balance. At the end of the year, you will then be able to look back and see just how well you stuck to those plans and whether you need to make additional adjustments to stay on track.
You’ll Find New Ways to get the Most Out of What You Earn
Part of a good financial plan is to look at ways to stretch your income and there are often surprisingly easy ways to do that when you actually start actively looking for them.
You’ll Be Forced to Think about Risks
Financial risk does not just apply to businesses and a financial plan will make you realize that. Just what would happen if you were to lose your job? Or your partner? How would you survive? No one wants to think about negative outcomes like those but a financial plan will force you to, meaning that you will be better prepared should the worst ever happen.
You’ll Finally Be in Control of Your Money
Too many people feel as if money controls their lives and that is often a source of incredible stress. A financial plan will allow you to finally feel like you are in control of your cash and that is a great feeling in itself.
You’ll Begin to Build Wealth
Research study after research study has shown that those who create, and then follow, a financial plan are far more likely to save than those who do not and to save a significant amount of money too. And income level does not really matter. Those on a lower income with a plan are still more likely to, for example, remain current on their credit card bills than those who make a little more money but do not bother to keep an eye on their spending.
You’ll Live Better
Financial planning will help you manage your money better but it will also improve your life in general. Once you are in control of your money many of those nagging financial worries will be gone and even if problems crop up you will be better equipped to deal with them. The result? A less stressed you who enjoys life at least a bit more than before.
Not quite on the right financial path yet, and need a helping hand to get you through a financial emergency? A short-term loan might be the answer.