Are you ready to be in control of your financial future? There probably aren’t too many people who would answer the negative to that one, but when it comes to a plan to achieve that goal, many people come up painfully short. After all, sure, it’s a great goal, but how do you accomplish it? Making matters worse, ask different professionals for advice and you’re likely to get different answers.
The truth is, you don’t need an accountant or a financial planner to develop a financial plan. You are the best, most-qualified person to put a plan together since it is your life you are talking about. Being directly involved in mapping out your finances will cause you to be more likely to stick with the goals you establish for yourself. Plus, you’ll have a keen awareness of where you stand financially and what it’s going to take to get you to the next level, whether it’s creating a savings plan or investing in opportunity zones. What follows are six elements of a good, solid financial strategy.
Create Strong, Reachable, Meaningful Goals
It’s been said so many ways, but it seems always to be the first bit of advice that anyone will give: set strong, meaningful goals. This should be done for various reasons but will provide you with something to shoot for and inspire you to reach your goal.
For example, let’s say you have $3,000 in credit card debt and you want to pay it off in six months. Buying a $40 shirt will rob you of your ability to accomplish that goal.
It’s a lot more motivating not to purchase that shirt and end up accomplishing your goal. Here’s a great way to put your goals into action: determine How To Keep Your Goals And Achieve Results.
Build Awareness by Building a Budget
When many people think of budgeting, the first thing that enters their minds is “Horrors!” Fortunately, that is for people who don’t understand the power that a budget can give them over their money in both the short and long term.
The good news in this is that there are many ways to budget, and all of them work. The job for most people is to find a way to budget that aligns with their personality. Budgeting can be as easy as using a few envelopes to allocate your money for different uses to carefully analyzing each income and expenditure. Choose the method that best fits you and stick with it.
Have an Emergency Fund
Things happen. Everybody knows that. For this reason, most professionals advise their clients that, before they do anything with their money, they should start an emergency fund. Most experts recommend that their clients should have three- to six-months of income in an interest-bearing savings account for emergencies. If you don’t have that amount available, save what makes you comfortable.
Have a Savings, Debt Payoff, and Investing Plan
How you accomplish this is up to you. It doesn’t matter whether a person has the primary goal of paying off debt, saving money, or investing. Whatever someone wants to do first, they should keep the other points in the back of their mind. For example, when saving for something, the saving will be a person’s priority. If someone has debt, paying that off that should be their priority.
If debts are paid off or are minimized, investing should be a priority. This could include investing in opportunity zones.
It doesn’t take shopping for insurance coverage to discover there are many types available. Regardless of what you want to insure, insurance is a good investment for your security.
Once you have developed a good, sound financial strategy, don’t do what many people do after they complete it: put it in a drawer and forget it. Financial planning works if you follow and work the plan. Not following a sound financial strategy will get you nowhere. However, following a sound financial strategy will serve as a roadmap that will help you reach your goals.