A step-by-step guide to build a personal financial plan
Neil Crossland
With 40 years of real-world experience under my belt, I offer straightforward, no-nonsense financial advice that cuts through the clutter. My approach is all about keeping it simple, sensible, and ethical.
When it comes to navigating life's big moments, think of it like planning a flight. Just like a wedding has a timeline and a budget, smart financial planning follows a similar logic.
Whether it's budgeting for groceries, planning for retirement, or handling unexpected expenses, these tips help you balance long-term goals with short-term needs.
So, buckle up and let's soar through the world of financial planning! ????
In 8 steps, you have a nice framework you can build on and adjust throughout your life.
1. Set financial goals.
Setting financial goals is like plotting your course in the financial world, providing direction, purpose, and a roadmap. Without clear goals, it's like flying aimlessly. Goals prioritise, inform decisions, and focus efforts, whether saving for a vacation, buying a home, or securing retirement. They turn aspirations into concrete plans, giving financial life structure and meaning. So, strap in for a purposeful ride towards your financial ambitions!
2. Make a budget.
Instead of thinking of a budget as way to restrict your spending, use it as a tool to organise your monthly cash flow to help you pay yourself first (savings/investing)—and still have room for the fun stuff.?Learn how to create a budget?that works for you—not against you.
3. Build an emergency fund.
Think of building an emergency fund as your financial safety net. Just like a pilot ensures they have emergency procedures in place, having a cash cushion shields you from unexpected turbulence. This fund is your go-to when the unexpected hits. Aim to stash away three to six months' worth of living expenses – think of it as your in-flight fuel for navigating through unexpected challenges. This financial buffer not only provides peace of mind but ensures you can stay on course even when the unexpected takes you by surprise.
4. Manage debt.
Navigating debt is like piloting your financial aircraft. Debt, when used wisely, propels you forward, acting as a strategic tool. Picture it as adjusting your financial altitude for a smoother flight. Responsible management is key to avoid financial turbulence. High-interest debts loom like storm clouds, threatening your outlook. Watch interest rates, ensure timely payments, and prioritise clearing high-cost debts. Mastering debt means maintaining control of your financial altitude for a steady and comfortable journey through your financial skies.
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5. Protect with insurance.
Life and medical insurance are vital safety tools in your financial arsenal, especially during unexpected twists. Life insurance acts like a parachute, ensuring your loved ones are protected financially. It covers debts and secures their future. Medical insurance, your cockpit armour, shields against hefty healthcare costs during unexpected health storms. These insurances serve as navigation instruments, offering security in life's uncertainties for you and your loved ones.
6. Plan for retirement.
Envision retirement planning as the fuel propelling your financial journey. Starting early provides ample runway to build a robust nest egg, akin to taking off with a full tank. Time, with compounding interest, exponentially grows your money. Early engagement isn't just saving; it's an investment in a future of comfortable cruising, avoiding financial turbulence. Retirement planning is your flight plan for a smooth journey into the golden years. Plot your course early for greater control over your financial altitude when it's time to kick back and enjoy the view. ?
7. Invest beyond your retirement plan.
Turbocharge your financial engine! Move beyond just retirement planning and consider fixed income products with double-digit returns for mid- and long-term goals. Educate yourself on options, set clear goals, and diversify to spread risk. Investing isn't just saving; it's accelerating towards your dreams. Buckle up!
8. Create an estate plan.
You don’t have to be wealthy, old, married, or a parent to need an estate plan, which also lays out who makes financial and health care decisions for you if you can’t make them yourself.?Learn the basics of estate planning?and options for creating one.
Finished? Here’s when to review your financial plan.
Take a fresh look at least once a year or after a big life change, such as:
Tip:?Around age 50, you may want to consider long-term care insurance and expand your financial plan to include income in retirement.
I hope that has given you some food for thought. If you would like to discuss in more detail your own personalised financial plan I'd be happy to have a quick chat with you either on the phone or perhaps a zoom or a team’s meeting.
Send me a message on LinkedIn and we can schedule a convenient time.