Ever thought why you keep struggling especially when going through bad times? In life, you will always experience highs and lows. Your kids can fall sick, you can get involved in an accident, or other disasters can befall you. The only way to enjoy life and go through both good and bad occurrences blissfully is one – creating and following a sound financial plan. Though it is not difficult, rarely do people draw or follow financial plans.
The following are simple 4 steps to creating a sound financial plan
(i) Establish where your money goes/ draw a budget
Because you already know the amount of salary or other revenue, you need to draw a budget on how to it is spent. Use a notebook and put down all the things that need to be bought. For example, you need to pay for health, housing, entertainment, mortgage, and other utilities. The focus here is establishing the expenses.
Come up with financial objectives
This is the most important step because all other parts will be hinged on it. Ask yourself the point you want to reach in 2, 5 or 10 years. Avoid generic answers to this question such as I want to be rich. Good objectives include, I want to have completed paying a mortgage and living in my house, or I want my saving account to have about $500,0000 and a miscellaneous fund for kids of $200,000.
To prevent dangers and disasters that can erase your plans;
• Take a disability insurance (very important for people without families)
• If you have a family, go for life insurance
• Other insurance covers to take include auto cover, renters cover, and health insurance.
(iii) Maintain focus on credit and start saving
In the society today, you do not want to have bad credit. Therefore, you must ensure that any credit is paid on time to avoid low credit score so that any financial institution you approach can advance you money. Notably, you must start saving as immediately as possible. To make savings, do not be very harsh on yourself by stopping all pleasures. The best thing is controlling them.
• Review the cost of expenditure and cut what is becoming too much.
• Reduce the costs here and there until you reach the saving targets and put the money in a separate account.
Commence building the portfolio and track your plan carefully
After making your saving for some time to meet emergencies, it is advisable to check for areas where the extra money can be put. For example, you might consider going to a mutual fund because the risk is low and money is managed by experts. The mutual fund allows you to identify sections where to put your money and further allows you to withdraw funds at will.
Make sure to manage the plan using various checkups after some time to ensure that all objectives are on track. Remember that to keep the costs low, you should take time checking the best being offered at affordable rates. For example, you can get a top hybrid bike under $1,000, fitness equipment, and other home products from top dealers affordably.