7 Key Steps To Creating Your Financial Plan

A financial plan can help you live the life you love and love the life you live. We all want to achieve financial security and independence and the best way to make that dream come true is to establish a sound financial plan of your own. 

For instance, if you had to take an exam, you’ll create a study plan to increase your chances of making good grades. If you decided to start a business, you’ll create a business plan no matter how simple to increase your chances of success.

A  financial plan acts as a roadmap. It removes the guesswork so you don’t have to. If you think that only rich people need to create a plan, you’re mistaken. A financial plan is for everyone regardless of  your tax bracket. 

7 Key Steps To Creating Your Financial Plan

Add debt statistics, insurance statistics, 

Setting your financial goals:

Having an emergency fund:

A fully-funded emergency account is your best defense to avoiding debt. I’ve always considered emergency funds as the linebackers of your personal finance. Before in

How much should you have in your emergency funds? It depends.

Do you have a family of your own? Are you responsible for more than yourself? Where do you live and what are your expenses? How much debt do you have? The answers to these questions will determine how much your emergency funds should be. 

At a minimum, your emergency funds should be up to three months of your total expenses.

Paying off your debt

Debt can hold you back from building real wealth. I

Paying off your debt also has a positive effect on your credit score. Your score is much likely to increase by several points once you. Similarly, having a maxed out credit card will keep your score stagnat and or lower it. 

Great credit score makes it easier to naviagte your finances because it ensure you’re borrwing at the best rate possible and that is a form of saving money. 

Having an emergency fund

Saving especially for investing

Keeping up with your bills

Protect yourself with adequate insurance:

There are all types of insurance today . There’s insurance for your car, your house, your family, for if you lose your job or unable to work due to a long-term or shorm term injury.

Building an investment portfolio:

There are a million and one ways to invest today and it’s much easier that. Your first step to building a solid investment portfolio is to take advantage of your company’s 401k. This is money invested in the stock market. The money is typically deducted from your paycheck and automatically invested. and out of sight is out of mind. You won’t miss that money much. 

If your company is offering a match, then you’re pretty much doubling that money. 

You can also choose to invest in real estate to diversify your portflio. This involves selcting an investment area and 

Finally: 

It is important you create a routine that allows you keep track of your financial plan. Life happens and situations change. Is your plan from a year or two years ago still valid today? Have you made any progress? If yes, how much progress? Do you need to change your plans? These are