The Steps to Preparing A Financial Plan for Your Future

If you want to be sure that your future is secure, then you need a financial plan. There are plenty of unforeseen events that could disrupt your finances, but with some good planning, you can minimize and mitigate the effects. With a good financial plan, you can take control of your future and avoid many of the money pitfalls that plague old age. How do you set up a financial plan? There are a few things to consider.

The Essentials of a Financial Plan

1. Budget

The first part of a financial plan is to set up a budget. You need to work out how much money you make, and how much you need to spend to survive, but that’s only the most basic level. Your budget plans should include balance sheets to review, an analysis of your financial strengths and weaknesses, and funding plans for any business or educational endeavors you have.

2. Investments

It’s hard to have secure finances when you rely only on your income from a job. You need to make some smart investments that will insure you have income in the future. Investing will need a good financial planner to give you the best advice. You should keep a portfolio of your investment records so you can use this to update your plan as needed.

3. Retirement Planning

At some point, you have to retire. You eventually get too old to work. How do you plan to keep your finances stable after you stop working? Your investments will help, but you also need to consider Social Security and possible retirement pension options. This part should also include a post-retirement lifestyle plan.

4. Estate Planning

A good financial plan considers more than just what you do in your own life. Estate planning helps you arrange for your remaining finances to be distributed after death. Without proper planning, you can find your children losing a lot of your money to taxes, funeral costs, and other expenses. You want to plan for how that money will be distributed in order to avoid problems for your family. There are many different options available that a financial planner can help you arrange.

5. Tax Planning

Taxes are just as inevitable as death. Your financial plan needs to factor in your tax payments. This also includes 401K and IRA contribution plans, as well as capital gains and income tax returns. These documents help you arrange a plan to keep your taxes from catching you off-guard and leaving you penniless.

6. Risk Management

Life is always risky. You need to have a plan for if things go wrong. This can include disabilities, illnesses, or long-term care needs. Having a life insurance plan can be a great way to mitigate some of these issues.

Steps to Building A Strong Financial Plan

1. Set Goals

As the Cheshire Cat once said, “If you don’t know where you’re going, it doesn’t matter what road you take.” If you want a financial plan to be successful, you need to have goals, both short-term and long-term. These goals can be making down-payments on a house, paying off student debt, buying a car, or starting a business. Whatever your goals are, you should outline them first so that you know what you’re working towards.

bookkeeping tools2. Collect Financial Information

Once you’ve outlined your financial goals, it’s time to get your financial information together. These items include rent or mortgage, utility bills, and other expenses, a list of assets and liabilities (such as properties, investments, and loans), retirement accounts, and a general spending history. All this put together will help you get an idea of what you can expect your lifestyle to cost you on a month-to-month basis and what sources of income you have to draw on to support it. This will help you determine where to go next.

3. Build A Plan

Once you’ve gathered all the info and analyzed it, it’s time to lay out the plan. Work out plans to pay off significant debts and loans, and savings for retirement. If you have big purchase goals, like a car or a house, plan out how to get the money and a schedule for payment. Plan out any future investments you may wish to make that you know of.

4. Stick To The Plan

Planning is all well and good, but it doesn’t help if you don’t stick to it. Once you have your plan worked out, it’s time to implement it. Start with the small steps first: if you have a plan to save half your paycheck, start by saving small amounts and working up to the goal.

Keep in mind that financial plans are long-term plans that can take years. You will likely not see the benefits of it immediately. Just stick to the outline steps and you’ll see the returns as time goes by.

5. Revise As Needed

A plan is good, but it’s important to realize that things change. There might be an unexpected medical emergency, you might have to change jobs, or other problems might come up. They need not even be problems; sometimes surprises work out in your favor. When things change your financial situation, you need to revise your plan to work with the new situation.

Stapley Accounting TeamWe Can Help You Set Up Your Financial Plan

Setting up a financial plan is no easy matter. There’s a lot of information to account for. Doing it all yourself can seem overwhelming. Fortunately, you don’t have to do it alone. Here at Stapley Accounting, we have experts in financial management just waiting to help! We can help you gather your information, analyze and collate it, and set up your financial plan for the future. If you need any advice or assistance, don’t hesitate to get in touch. We’ll be happy to help you secure your future.