Personal Financial Planning Tips : How to Create a Financial Plan

I’m going to talk today about how to create a financial plan. There are actually quite

a few ways to create a financial plan, based on your own financial situation. They can

become very complex, or they actually could be very simple, depending on what your needs

are. I’ll start with a simple process. Really, when you’re looking to create a financial

plan, the first thing that you’re going to want to do, is to create a budget, and I know

that, that sounds like it’s a painful process, and it is to a lot of people, but it really

doesn’t have to be, but a budget is a really important key part of creating a financial

plan, because what it’s going to be telling you, is what amount of income today, you have

coming in after taxes, what your expenses are, your fixed and your variable expenses

are, including things that are unforeseen, like car repairs, gifts, camp for the kids,

vacations, things like that, but what you’re really trying to get, is your bottom line.

You’re going to look at your income that’s coming in. You’re going to look at all of

your expenses that you have, and you’re going to find out what your net is, and your net

is going to be, hopefully, a number that’s in the black, meaning it’s going to be positive,

so that after you’ve paid your expenses each month, you have money left over. If you find

when you create a budget, that you have a negative number at the bottom, really the

only two things that you can do, are to increase your income, or to decrease your expenses,

but it’s going to be hard to create a solid financial plan, if you don’t have a positive

number, or at least you’re at a break even, but really, what you’re going to be doing,

when you create a financial plan, is looking at what your financial goals are. It could

be buying a car, in three years. It could be buying a home in five years. It could be

sending your kids to college, in seventeen years, so they can be short, intermediate,

or longterm goals, so really a financial plan is, all come down to creating a budget, that’s

going to be a working budget for you, and that’s going to be positive, and that’s going

to be attached to specific financial goals, that you would wish to accomplish. The more

complex side of creating a financial plan, goes much deeper. As people find that their

situation gets a little bit more complex, a financial plan grows to encompass things

like retirement planning, and making sure you’re saving enough today, to fund your retirement

in the future. Estate planning needs, which can be living will, and a living trust, risk

management, which includes all of your insurance coverage, your health, your medical, disability,

property and casualty. It can also include tax planning. It can also take a look at investment

planning, which is a key piece of your financial plan, what your portfolio looks like today.

How to allocate it properly, how that might grow in the future, and then it all starts

with still creating that budget, so as your situation gets more complex, there’s a lot

more variables that come into play, creating a really solid, comprehensive financial plan,

and to do that type of planning, I would highly recommend working with a certified financial

planner. My name is Julie Asti. I’m a certified financial planner with Asti Financial Management,

and you can learn more about my services, and my company at: www.astifinancial.com.