No one cares about your financial well-being more than you, so it’s important to have a financial plan for yourself. A financial plan creates a roadmap for your money and helps you achieve your goals. Financial planning can be done on your own or with a professional. Here are the Essential Components of a Financial Plan.
1. Write Down Your Goals – One of the first things a financial planner would ask you is what you want your money to accomplish. So that’s the first thing you should ask yourself. What are your short-term needs? What do you want to accomplish in the next 5 to 10 years? What are you saving for long term? It’s easy to talk about goals in general, but get really specific and write them down. Which goals are most important to you? Identifying and prioritizing your goals will act as a motivator as you dig into your financial details.
2. Collect Information About Your Finances & Investments – Once you’ve established goals and you’ve gotten help if you want it, you can begin an overview of what your financial situation looks like. Include any assets and liabilities, such as properties, investments, retirement accounts and loans. Analyzing all of this information provides a more accurate understanding of your current financial standing.
3. Have an Emergency Fund – All the planning in the world won’t help if life throws you a curveball and you’re not prepared financially. That’s where an emergency fund comes in handy.
4. Pay Off Debt – Sadly, you can’t really kick-start your financial future if you’re carrying a ton of debt. Between sky-high interest rates, large minimum monthly payments, and the damage lots of debt can do to your credit score, you’re better off paying your debts first.
Do You Need Financial Planning Help?
A financial plan isn’t a static document — it’s a tool to track your progress, and one you should adjust as your life evolves. It’s helpful to reevaluate your financial plan after major life milestones, like getting married, starting a new job, having a child or losing a loved one. If you need help in Pittsburgh Financial Planning, please contact us at AccountMaster today!