In a world in which economic transformations are accelerating and increasing the challenges of daily living, there is no longer a luxury financial plan, but rather it has become an indispensable necessity for every individual or family who wants to maintain their financial stability and achieve its future aspirations with confidence.
In an expanded report published via “Forbes” by the writer and financial advisor Tro Tampelin, 10 basic elements were reviewed that constitute the integrated framework for any successful and long -term financial plan, whether you are an employee with a fixed income, working in a free field, or running a small institution.
1. Determine clear financial goals
The first step in any solid financial plan begins to determine the financial and measurable financial goals, whether it relates to payment of debts, buying a house, creating a project, or saving for retirement.
The goals are the main driver of the financial plan and helps you make rational decisions instead of emotional rush.
Goals should be divided into time categories:
- Short -term (1-3 years): such as building an emergency box, paying simple debts, or saving for a holiday.
- Medium -term (3-7 years): such as buying a car, financing a university study, or having a child.
- Long -term (7 years or more): such as retirement, constructing a sustainable commercial project, or building a real estate wealth.
The clarity of the goal also guarantees a flexible motive and strategy to deal with potential challenges.
2. Explanation of net wealth
Net wealth It is the difference between the sum of assets (such as real estate, investments, criticism, valuable property) and opponents (such as real estate loans, credit card debts, personal loans).
This indicator not only determines your current financial location, but it uses a standard to follow up progress over time.
The more net wealth, this indicates a solid financial base. It is recommended to review the annual or semi -annual wealth statement to compare growth, determine the weaknesses or strength in the asset structure, and control the financial strategy when needed.
3. Cash flow plan
- Cash flows means managing the money involved and graduated monthly. It is important to understand all sources of income (salary, investment returns, income from rents or free business) and meet them with expenses (housing, food, insurance, education, entertainment).
- Create a realistic budget that allows you to control your money, reduce waste, and direct the surplus towards investment, pay debts or savings to goals.
4. The Emergency Fund
This fund is your financial pillow at the time of crisis. Whether you lose your work or face unexpected medical expenses, the presence of this fund protects you from resorting to loans with high benefits.
Experts recommend providing the equivalent of 3 to 6 months of basic living expenses, and keeping them in an easily accessible account, such as a high -return savings account or the money market.
5. Debt management
The debt is not necessarily bad, but its administration is not organized may hinder financial growth. Therefore, debts must be classified into:
- Good debts: such as mortgage or educational loans.
- Bad debt: Like high -interest credit card debt.
Use strategies such as:
- Snow Ball: Pay the debts from the smallest, the largest.
- Mountain breakdown: payment of debts according to the highest benefit to reduce costs.
The credit rating should also be monitored and improved by paying in time and reduce the use of the balance.
6. Insurance coverage
Insurance is an essential safety network against sudden risks. Includes:
- Life insurance: to protect the family financially at the death of the breadwinner.
- Health insurance: to cover costly health care costs.
- Insurance of deficit: to provide income in case of deficit.
- Property insurance: such as car insurance or home.
As the stages of life change, insurance documents must be modified to suit the new needs.
7. Investment strategy
Investment is a way to achieve returns on capital, and depends on:
- Variety of wallet: distribution of funds in different categories to reduce risks.
- Determine the time horizon and acceptable risks: to determine the appropriate investment tools.
Among the common tools:
- Arrows for growth
- Bonds for fixed income
- Low cost boxes for spread and effectiveness
- Real estate to protect against inflation
The portfolio of the wallet is preferred annually or when major changes occur.
8. Planning for retirement
Start by photographing your lifestyle in retirement, then select the amount needed to achieve this. Consider:
- Age of retirement
- Living and health care costs
- Inflation
Take advantage of the retirement savings accounts and start early to achieve a cumulative force, do not forget to develop a plan for a safe withdrawal later.
9, tax strategies
Taxes greatly affect net income and investment return.
It is important:
- Postponing revenues or accelerating the expenses when needed.
- Take advantage of tax discounts.
- Using tax -exempt accounts.
- Legal outlets or charitable donations can also be used to reduce the tax burden.
10. Education Plan
- Whether you save to teach your children or for your self -teaching, you must start early.
- Understanding how income and assets affect the eligibility of financial support is an important matter to obtain the appropriate grants and loans.
