1Know Your Net Worth
Do you know what you’re worth? Do you have a house? Do you know its value? Do you have an IRA or 401K or savings accounts? These are called assets and you need to add them up. Then you need to subtract what you owe. Mortgage, credit cards, other loans. The first step to planning your financial future it to know your net worth. You see, how can you begin the first leg of your financial trip if you don’t know the condition of the car or how much gas is in the tank. The second step is to decide where you’re going.
2Decide Where You’re Going
Develop your financial goals. Your financial goals can range from spending all your current income to developing an extensive savings and investment program for your financial security. It also means figuring out the difference between your needs and wants. It means identifying how you feel about money and why you may feel that way. Now others can suggest financial goals for you, but this is something you have to do for yourself. It’s your life and it’s the only one you’ll get, so spend some time figuring out what you want from it.
3Develop A Course Of Action
Develop a few courses of action in order to make the best decisions. Think of this in a simple way. You can continue the same course of action, expand the current situation, change the current situation, or take a new course of action. Of course, not all these categories will apply to every decision situation, but they do represent possible courses of action. And be creative. Creativity and decision making is vital to effective choices.
4Achieve Your Goals
In this step of the financial planning process, we will develop an action plan. This will require you to choose ways to achieve your goals. As you achieve your immediate and short term goals, the goals next in priority will come into focus. To implement your financial action plan, you may need assistance from others. For example, you may use the services of an insurance agent to purchase property insurance. But all along, the need to be educated is paramount. One of the best ways I know is to listen to my show.
5Reevaluate And Revise
Reevaluate and revise your plan on a regular basis. Financial planning is a dynamic process that does not end when you take a particular action. Since life is often changing, it may require more frequent assessments. These assessments are easier when you’ve gone through the financial planning process. And don’t forget the need to be educated is paramount.