A good financial plan will help you to establish your life goals and a realistic strategy to achieve them. It will also help you monitor your progress along the way, make adjustments if and when required and help you remain on track…and reach your goals.
So, let’s look at some practical steps to get you on your financial planning journey:
- Establish your goals – regardless of whether your goal is to save the deposit for a first home or saving for retirement this will help you create the means by which you will work towards achieving your financial goals. On the matter of time, it will be important to group your goals into time allocated to achieving them, short-term (less than 1-year), medium-term (1-3 years) and long-term (3 years+).
- Gather your information – You already have all of the necessary information (how much you earn and how much you spend) even if you can’t recall or locate it all right away. Take some time to gather your information in one place so that you can plan out how you will reach your financial goals. Include income records, current account statements, receipts and credit card statements as these should provide you with the vast majority of the information you require to start planning.
- Use a planner to stay on track -Putting a system in place that allows you to quickly and easily track how your financial plans are progressing will go a long way to remaining on track. For example, if your goal is to save €1,000 over a 3-month period, this would require you saving, on average €11 per day over the 90 or so days. A financial plan would let you see how well that plan is progressing. If it’s something a bit more substantial, like saving 3 – 6 months living expenses for an emergency, or rainy-day, a financial plan will help you keep your progress visible…and make any adjustments if needed.
- Maintain balance for today and the future – regardless of what your financial plans are, it is really important they factor in your need to live today. After all, there is little point dreaming about a certain future if it means choices so difficult, you have little to live on today. Successful financial planning tracks income and expenses and applies some basic rules to ensure you can live today and plan for the future too.
Finally, it is important to remember that financial planning is about your financial wellbeing- ultimately, a good financial plan will provide individuals and families with a sense of security and peace of mind. It will serve as the foundation to having the resources in place to tackle a financial emergency, no matter what situation may arise.
Frank Conway is a Qualified Financial Adviser and author of Ireland’s Essential Guide to Personal Finance