Everything Starts With a Plan
Every great thing that has ever been invented or will be invented started out as a plan or a vision. Many of the things we used today started as a simple goal to fix or make life better in some way. Do you think personal finance any different? Instead of building a multi-million dollar product and a company you are trying to build a good life through financial prosperity. A financial plan is the most important part of success because you need to have an end goal and target.
How much have you thought about your financial success? Do you already have some type of financial plan? This is an area that has been neglected by our education system or people use cute saying to downplay its importance. You will have to learn to be financially successful on your own or through mentors. It is a scientific fact that we need to become financially successful to live a fulfilling life. For example, the Maslow’s Hierarchy of Needs consists of having financial success up to a point in order to climb the ladder of psychological needs.
4 Reasons Why You need A Financial Plan
1) Increase Your Likelihood of Financial Success
Having a financial plan will definitely increase your chance of happiness and will help you move onto better things in life. Having the plan to go buy will increase your financial success and will help you achieve what is the financial success to you want. If you want to create a great plan, there are some things you should study:
Study the Financially successful
There is a good chance that someone else has achieved the same goal that you have. There are many books in this area that are great reads. I will write blog posts about them because there are too many good resources for me to add them all here.
Learn to be strategic with your money
by tracking your spending and thinking of how you will increase your income. Every Business tries to find ways to reduce costs and increase revenues. This same concept applies to your personal financial plan. How can you reduce your monthly costs or make more income? There are some ideas on this site to assist you with this process.
Keep your money from the government.
You might not be able to get out of paying taxes but it definitely helps to take this into consideration with your financial plan. You want to pay your share and keep the rest of your money.
Make money off your savings
If you have a good plan financially then you will need to think about what to do with your leftover funds. Investments will help you have a multiplier effect on the amount of money you earn, save, and build your net worth.
2) Have Greater Control Over Your Finances
You have set yourself some financial goals and know where you are going. You can see where you want to be financially in the next year, ten years, or possibly 20 years. This helps you make better decisions in order to achieve success. Most large companies have an accountant known as a controller who controls costs and helps a business achieve their goals. You need to be your financial plan controller by:
Think about your Financial plans Daily
You make and spend money on a daily basis. I know it is easier said than done but it is important to think about your goal. Then to think about how this is effecting your future.
Have a savings and contingency fund
In the business world this is called a sinking fund. There will always be times when you need some extra money in emergencies. It is important to have a contingency fund for those situations.
3) Improved Relationship With Your Spouse
There is a high divorce rate within the United States of about 40 to 50% according to the APA which is a staggering amount. What do all these couples fight about that leads to divorce? There are many factors that can lead to this but 22% of divorces are financially related. Another 43% are due to the fact that couples are incompatible which could mean that their values aren’t the same. Often times one of the things that make couples incompatible is their financial vision so a large portion of those divorces involve money.
Fights Over Money
There are plenty of other things to fight about. Do you really need to fight over money.
Vision of Success
Do you and your spouse share the same vision of what success looks like. You won’t get very far if you aren’t congruent on your finical planning.
Not Having a Joint Financial plan
Do you and your spouse share the same vision of what success looks like.
4) Worry Less About the Future
The future is a scary place if you are living from paycheck to paycheck not knowing if you will be able to pay your debt or have enough money left over to afford your bills. Financial planning will help you reduce a lot of stress and anxiety in life because it is one less thing to worry about. Someone is probably going to read this and say,
“Yeah but money isn’t everything”
You are right that it isn’t everything but it solves a lot of problems in life that are unnecessary. Money itself doesn’t bring happiness but it creates the freedom for you to be happy and live a better life. Most of the largest goals that we have in life are financially related.
Buying a Home
One of the first goals many people have is to own their own home. Even after the finical crash of 2008 I still think it is a good idea to buy when the price is right.
Traveling to new places
One of the best experiances in life is getting to leave my home and go outside for a new prespective. Traviling may cost you money but love and new freinds don’t cost a dime.
Do you have a solid plan to retire? Think about how much inflation goes up every year. At one point a million dollars was a huge investment account. With inflation increasing by 3% a year over the next 20 years that will not be a large enough nest egg for retirement.
Helping out others
This is something that keeps me motivated and many others. I don’t have children but have charities that I want to help with there cause. This can be rewarding either way