1.
Plan Your Financial Goals- You can not just simply dream without doing anything. If you want to get married or buy your own house or travel the world someday, you need to set a financial goal and plan on how to achieve it.
2.
Plan Your Expenses- Do you realize how much you spend on non essentials every month? When you know how you spend your money, you will know how to control it so you know which expense is actually a “need” and a “want”.
3.
Plan Your Savings – It is income minus savings equals expenses. Learn to set aside a portion of your monthly income to savings regularly. You can start with a small portion and increase this gradually as your income expands.
4.
Plan Your investments – It is not enough to keep your savings in the bank earning minimal interest. Maximize potential returns by investing your savings in an investment portfolio of stocks or bonds or both, whichever that will match your risk appetite.
5.
Plan Your Net Worth – You can increase your net worth by increasing your assets. You increase your assets by paying off your loans, appreciation of your invested assets and increased cash flows from income. 6.
Plan Your Assets – Yes, you need to buy a good car, use laptop, enjoy iPad and wear branded jeans but do not invest bulk of your money into these type of assets that depreciate immediately. Invest in assets that appreciate.
7.
Plan Your Liabilities – You dont own anything if you what you have is borrowed from the bank or someone else. Cut down your liabilities by paying more than the minimum required by credit card companies or paying your loans in advance to save on interest and shorten the term.
8.
Plan Your Security – Will your family still enjoy the same lifestyle if you, as a breadwinner, suddenly become unable to work? Know how much of your income that cannot be covered by your existing assets and protect this by insurance.
9.
Plan Your Retirement – How much money do you want to spend monthly without having to work when you retire? Know how much savings you need to have by retirement by planning how to grow your money now.
10.
Plan Your Progress- Create a personal financial roadmap that will guide your journey towards financial freedom. Monitor how you are doing every six months and see to it that you follow your plan.
Top 10 reasons on why financial planning is important | Marvin Germo