A good financial plan in place is very important to build wealth. They help you achieve your gaols and live the life you have planned for you and your family. Following you’ll find important steps to create a good financial plan for you:
1.
Discover where your money goes right
now
The first and foremost step to create a good financial plan is to analyze where
your money goes currently.Start jotting all your expenses in a notebook. You
can opt for a tech-savvy approach wherein a personal finance app keepstrack of
all your expenses for you. Continue doing this practice for 3-4 months.
2.
Write down your financial goals
Having correct financial goals is the foundation for achieving financial
freedom. After all, it’s important to know what you want to achieve in order to
actually achieve it. However, make sure that your goals are SMART – Specific,
Measurable, Attainable, Relevant and Time-based. Also, prioritize these goals and try to break
them into smaller chunks so that you don’t get overwhelmed.
3.
Create an emergency fund
It’s crucial that one of these goals includes a plan to deal with the
uncertainties. You need to make sure you are prepared to face the storm. Failing
to do so would result in adding on to the debt with every financial bump in the
journey. Financial advisors recommend stashing at least 3 to 6 months of your
salary.
4.
Pay off your debt
You can’t kick start a financial future if the burden of hefty debts is holding
you down. Make a debt pay-off strategy and be patient yet consistent while
working towards being completely debt-free. This will always help you to
increase your credit score.
5.
Start building a portfolio
After saving enough for an emergency fund, start building your portfolio. For
new and seasoned investors, the easiest way to build a portfolio is by
investing in mutual funds. There are several types of mutual funds like equity
mutual funds, debt funds, etc. available to investors that they can choose from
according to their goals.
6.
Track your mutual fund investments
It’s important to keep a track of your investments. Manage your financial plan
to ensure that it remains congruent with your current financial situation.
Tracking your investments also helps you to understand if they have performed
according to your expectations.
7. Plan for taxes
Yes, taxes are annoying but they are a part and parcel of your life and sadly
your investments. They are not going anytime soon. Not planning for taxes can
hamper your cash inflow in a major way. You can avail the services of a
financial planner or tax accountant to ensure that your plan is tax-efficient.
Creating a
financial plan requires work and patience. Owing to the diversification offered
by mutual funds, a lot of investors prefer investing in mutual funds online. Remember,
this is your journey, and only yours, nobody else’s. So plan accordingly. Happy
investing!