Start Your Financial Planning With these 5 Effective Steps
Summary: Do you have a
financial plan to fulfill your dreams? Here are five steps to take you closer
to your professional and personal goals.
"A
good financial plan is a road map that shows us exactly how the choices we make
today will affect our future." – Alexa Von Tobel.
Most of
us plan for our studies, career, personal and professional goals that we would
like to attain in the future. But when it comes to your finances, do you have a
plan? Many people lack financial planning, thinking it is a time-consuming
process. However, a personal financial plan is a formal process that has the
power to improve your economic life.
Entrepreneurs
must establish a plan to organize their finances to know where exactly their
money is going. It is critical to formalize the process if you are serious
about building wealth. You can work with a business coach who can help you
build a strategy associated with your goals.
Here
are five steps that will help you to develop a personal financial plan and
growth strategy:
1. Analyze Your Current Situation
It is
essential to review and analyze your current financial status if you want to
create a sound financial plan to achieve your goals. Reviewing your current
situation means giving yourself an overview of all your income, debts,
expenses, investments, etc. Begin by taking inventory of your existing assets
and liabilities and create a balance sheet.
Define
your financial objectives and be clear about your goals, as they will provide a
roadmap for your financial future. Your goals should be:
a).
Quantifiable & achievable
b).
Defined goals with a set timeline
c).
Needs and desires in separate columns.
You can
consult with a good financial advisor or a business coach in India to assist you.
2. Gather Financial & Personal Information
Financial
planning and its success will depend on the quality and clarity of the
information you will provide to your adviser. Once your adviser captures all
the relevant information you provide, he can create a detailed financial
statement associated with your finances.
The
financial balance sheet will consist of:
i).
Income and expenditure
ii).
Assets and liabilities
iii).
Risk factors, capacity to take risks, and risk attitude
3. Find a Budget that Works for You
Budgeting
is an essential part of successful management from a country to a household.
Many people don't like budgeting as it feels challenging to stick to. But this
does not mean that it is a difficult task. It simply means that the budgeting
system is not customized according to your requirement.
The
concept of creating a budget does not imply that you have to cut back on
everything you love. It is simply about controlling unnecessary expenses and
making mindful purchases. But for it to be truly effective, you can try a
method like the 50/30/20 rule, according to which 50% of your budget goes to
pay for necessities, 30% or less to discretionary items, and 20% or more to
savings and debt payments.
To
understand how you can plan more efficiently for your future, you can attend
our Masterclass by billionaire professors accessible on
our Bada
Business community app.
4. Choose Your Rhythm
Leadership Consultant, Dr Vivek Bindra, believes that if a strategy fails, change the
strategy, not your goal.
Everyone
has different goals and hence different requirements. It is not necessary that
if your friend who has zero liabilities is saving her entire salary, you must
also follow in her stride.
Instead,
customize the plan. If you have a consistent salary, it is easy. You can choose
the percentage you would like to save each month. However, it gets tricky for
entrepreneurs and small business owners because of the variable Income. So,
entrepreneurs can consider a lower amount to automate monthly. If you are a
small business owner, you can also set a calendar reminder to review
contributions quarterly.
5. Get Help from a Business Coach or Team of Advisers
Entrepreneurs
have so many responsibilities and tasks at hand. So, if you try to manage your
finances, it may be too much to handle. And your growing wealth could become a
task. Begin by taking professional help instead of trying to manage it all on
your own.
If you
follow these five strategies mentioned above, you can build a solid foundation
to grow your wealth and make smarter money decisions for your future. To gain
in-depth knowledge, attend our Masterclass available on
our Bada
Business community app, in which you can learn simple yet effective
financial strategies.
Download the app now: https://tinyurl.com/nhav2kp6
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