Now and then, you come across a financial situation that makes you think, “I could have done this better.” Most times, thoughts like this run through your mind because you landed in an unpleasant financial situation.

Financial planning is a step by step guideline that helps you track and align your finances with your goals. Some experts define it as “a process of managing your money to achieve personal financial satisfaction.” It is the pathway to controlling your financial goals.”

There always comes that time when you need to invest money or other resources, and without a solid plan, you may run at a loss at the end. A financial plan is a conscious blueprint that would help you keep track of your expenses as well as your income, your investments, and even your savings.

Why Do You Need a Financial Plan?

In Australia, every individual is at different levels on the commercial scale. Every individual, regardless of where they fall in the city’s financial pyramid, needs an effective plan which would help them prioritize and achieve targets according to their income.

A financial plan does not only help you prioritize, but it allows you to set short and long term goals in order of importance. It superficially helps in making critical financial decisions, instills discipline, and secures your retirement plan.

Whether you are a professional in business and finance or not, it is imperative to know how to plan against financial situations on your own. As much as you can approach professionals to make your plans for you, some personal financial decisions are best made by you.

How to Be Your Financial Planner

Now that we have established the essence of having a financial plan and the merit of getting it done yourself let’s move on to how you can be your financial planner in 2020.

  • List Out Your Financial Goals

Making a list of your financial goals is essential. This way, you don’t miss out on crucial details included in your business plan. After listing out, you can then prioritize based on urgency and importance with relevance to your income. List the short term and long term goals. Use the SMART plan to analyze your goals and make your final draft.

  • Draft Your Budget

When finances are involved, a budget cannot be side-lined. Budgets are those balanced lists that give you a view of how to make optimal use of your money. It considers your income, your expenses, and your investments within a set period.

A budget would help you arrange your needs in order of importance, making it easier to share funds with each of your essential financial goals. If you have taken a loan or are in some other kind of debt, having a budget would discipline you in paying off that loan within the speculated time. From a regular pen and paper to budgeting tools like Excel, drafting a budget is the first and most natural step in financial planning.

  • Asset Allocation

Asset allocation is the foundation of a financial plan. A balance in your debt and equity will help you reach your financial goals within the speculated time frame.

  • Use a Reliable Financial Planning Software

Remember, we talked about using tools while making a financial plan? A vital tool in your hand would be financial planning software. However, ensure you have the right one for you and your business.

Look out for responsive and easy-to-use finance software that allows you an insight into your future plans. The ability to manage a complex set of financial assets is another indicator of the right financial planner.

Lastly, on this point, it is pertinent that the software provider guarantees the security of your personal information.

  • Have a Contingency Fund

A contingency form, otherwise known as a reserve or emergency fund, is a financial strategy of planning your way out of emergencies. A contingency find is fundamental in any financial plan. From medical expenses to business loss and accidents, emergency funds can buy you out of debt and bankruptcy. So whenever you are making a financial plan, do well to include it in your project. All you have to do is review your budget and save up to 6 months of your living expenses.

  • Health Insurance

Health insurance is the most important yet most ignored part of personal finance. Sadly, people only take this important when something terrible has happened. Considering the “income rule,” it is advisable for you to have 8 to 10 of times of your income assured.

  • Pay Off High-interest Rates First

You should pay off high-interest debts first to reduce the interests paid overtime on your credit cards, avoid taking high-interest credit and spend within your means, make a note not to buy things you don’t exactly need.

  • Plan For Your Retirement

A lot of people understand the importance of a retirement plan, but not many end up doing it. Allocate a specific amount from your income for retirement and include it in your budget. Make sure you save at least 10% of your income for securing your retirement.

Taking each of these tips, one by one, will help you secure a solid financial plan. Finally, ensure that you review your policy regularly and adjust it with the changes that have taken place in your finances. With all these in place, you are sure to be your financial planner.