Gather the relevant documents and account statements which will establish a clear picture of your current financial situation.
Create both short-term, as well as long-term plans when outlining your financial goals.
Begin actively puttin your financial plan into practice.
Tweak your financial plan as the goals in your life change.
The first step you need to take when creating a viable financial plan is to determine exactly what needs to be accomplished. Start reviewing your feasible short and long term objectives and goals. These can include things like buying a brand new car, paying off your student loans, putting a down payment on a home, et al. These goals will then become the driving motivation of your financial plan.
Get the big picture of your financial future as a whole when you outline these goals. All your finances are connected, so be sure not to focus on just one aspect of them. For instance, when your’re looking at family planning, you might think about not only will you start a college savings fund, but you might also consider putting a down payment on a house
Once you have established your goals and received help if you want and need it, you can create an overview of your financial situation. Include all assets and liabilities, such as loans, investments, retirement accounts, etc. The thorough ananlysis of this information will provides a more accurate understanding of your current financial position
As you begin collecting this information, begin with the consistent items like your rent or mortgage, retirement account, utility bills, and all other fixed expenses. After that, take a look at your spending habits and history to get an accurate idea of what you would normally spend on items like travel, clothing, groceries, entertainment, etc. Of course you’ll want to have a full sense of your income, which wil may include your paycheck, rental income, and any investments
You can determine your next steps when you know where you stand right now. This vital information will help you determine the right path you need to take in order to achieve your goals. You can tweak your goals or timelines based on your starting point, and determine their feasibility and practicality
When you have your financial standing and your goals defined, you can begin developing the action steps of this financial plan. More than likely, this will include wanting to save money for retirement, an unseen emergency fund, or a large purchase down the line. Making Investments will likely play a significant role in your financial plan. Remember that over the long-term, investing in the market is probably the foremost way to grow your wealth.
Exactly how you invest will be up to your personal preferences and risk tolerance. When you work with a financial advisor, their guidance can help you determine what will be the wisest asset allocation between small-cap and large stocks, cash, bonds, and other alternative investments.
If one of your goals is a big purchase like a house or a new car, then you will want to include practical steps to build up your credit. You are well on your way, if you already have an excellent credit rating, however, If your rating is not where it should be, a part of your plan should be focusing on paying down student loans and credit card bills on time, as well as exploring other methods for building up your credit.
In conclusion, if you have considerable debt, you’ll need to concentrate your efforts on paying it down. How you tackle this challenge will be up to you — perhaps you may get get a consolidation loan. Perhaps you can increase your monthly payment, etc — the answer will be dependent on your financial situation.
A financial advisor’s sage advice can really help with your financial planning process They can offer sound recommendations which will be based on the overview of your financial health. It may be suggesting the minimum amount you should for savings or maybe a timeline proposal for debt repayment Financial planners are here to help. Always pay close attention to any risks or alternatives that they may point out. Should your financial plan ever need to be changed, these helpful steps will prevent you from ever getting stuck.
Once you have created a plan, it is then time to put it into action. It is probably easier to start small, rather than immediately jumping into the deep end. As one example, instead of saving one half of your paycheck all at once, you can start saving in smaller increments.
Your financial plan’s timeline can stretch on for years, so there may not be immediate results for you. Just adhere to the steps outlined in your plan and you will reach those satisfying milestones in short order.
It’s very important to follow the steps you set for yourself in your financial plan, However, it’s also important to recognize that some unexpected things can happen, like perhsps starting a new job or having a medical emergency. Be ready for when situations arise that you didn’t expect. They can impact your finances, so you’ll need to make changes to the plan accordingly. This way, it will truly reflect your financial standing.
Financial advisors are different than professional specialists like estate planning attorneys, as they tend to focus on a comprehensive overview of financial planning. They provide not only an exacting gauge of your overall standing, they can also give extensive advice in helping you to meet your goals. They can also help you create a tax-friendly plan.
When you are choosing a financial advisor to help build a financial plan with you, you should look for important designations like “Certified Financial Planner” (CFP). Certifications ensure that the advisor has undergone the proper education and has in-depth experience in the financial planning field. While it’s certainly possible to craft a financial plan on your own, it’s an exceptionally difficult process. This is where a financial planning-focused financial advisor can come in handy.
Bob Maloney, of Squam Lakes Financial Advisors, is an expert financial advisor who has over 40 years of experience in advising his clients. If you live in the greater Campton, NH area, are looking for someone who is a fee-only advisor, understands Financial Planning thoroughly,, and is fully accredited, Call Bob today for your no-obligation complementary consultation. You’ll be glad you did!