Whether you’re trying to get into better habits or planning your finances for the future, it’s essential that you establish a solid plan. A well-structured financial plan not only helps you manage your monthly outgoings, but also guides your long-term money goals.
Here are some tips and tricks to help you create a plan that allows you to take full control of your finances.
The importance of a financial plan
A financial plan serves as a roadmap. It outlines your major objectives and helps you to make key decisions. It could be that you’ve recently started a new job and you’re trying to work out how your new salary falls in line with your household needs. Or maybe there are some major changes coming up for your family, like you’re having a baby.
Additionally, having a plan in place can help in the event of an emergency. It may be that you have an unforeseen debt crop up or your vehicle urgently requires repairs. By knowing how your finances are performing, you’ll be able to establish if you have savings in place for such an event.
Assess your financial situation
Begin by working out what your finances look like right now. What’s your household income? What are the monthly outgoings?
Take a look at your banking for the last six months to establish how much money you have left over once all the major outgoings are covered. While you might have been impacted by the rising cost of living, now could be a good opportunity to work out how your finances are shaping up.
Create a budget
A comprehensive budget will include expenses such as rent, utilities, and any other relevant outgoings. By estimating your income and expenses, you can make sure that you have sufficient funds and avoid financial strain.
From there, you can work out how much you have to spend on everything each month. You might want to make some adjustments in order to save. For instance, you could change where you buy your groceries as this could save you money in the long run. Work out your budget and return to this often.
Set realistic goals
Take the time to add in some financial goals. It may be that you hope to buy a house or you’re trying to build your credit history. Maybe you’re trying to build a savings pot. Having achievable goals in place will help you to keep your finances on track.
Regularly reassess
Come back to your financial plan as often as possible. Try setting aside an hour a month to double check your budget and reassess your goals. It may be that you have to make minor tweaks or major updates, but it’s essential that you don’t come up with a plan and never check in on it.
