Quote of the Week: “Success is the result of perfection, hard work, learning from failure, loyalty, and persistence.” – Colin Powell.
Taking control of your finances and making plans to achieve your goals are the first steps towards mastering the financial planning process. Robust financial planning ensures a sustainable and secure future. Though taking the first steps to plan our finances itself is a good start, the following tips will ensure that you will reap maximum benefits from the entire financial planning process.
- Review Your Financial Position
An honest review helps point out one thing; mistakes you have made in the past. Every one of us makes some mistakes in our financial decisions. Mistakes like buying something we cannot afford taking a loan we don’t need because it is easily accessible, taking loans at high lending rates or making a bad investment are few common financial mistakes we often commit.
Making a mistake is not wrong, it is human. We, however, have to learn to from our past financial mistakes and commit ourselves to correct them. These past mistakes will always come back to haunt us if we fail to take corrective action today.
- Prioritize Realistically
Though financial planning would help to set our financial life in order, it cannot cast a magic spell to turn our dreams into reality. It is important that we prioritize the goals we want to achieve because resources are limited.
Prioritizing goals also means making trade-offs. This means we should be ready to let go of some of our dreams in order to achieve our goals. Once we prioritize the goals, we have to be realistic about translating the goals in monetary terms. It is not advisable to expect unrealistic returns on investment; if ignored, this can lead to chasing after getting-rich quick schemes where the risk of losing all our hard-earned money is very high. External factors like risk, inflation, interest rate changes and other economic factors have a major influence in determining the return from investments.
- Implement Immediately
Putting together a financial plan is a job half done until put into action. We often postpone implementing our financial plans to later dates. The success of a well-planned financial road map depends on how soon we start working on it. The early starters always have a huge advantage of the power of compounding and the flexibility of saving lesser amounts.
- Monitor Progress
This is another area many people fail in. You have to monitor your progress and make adjustments accordingly. Keep track of your budgets, your savings, investments, etc. Ensure you are on the right track and if you are not, steer towards the right direction. Monitoring your progress periodically also helps you figure out what works and what doesn’t.
Everybody is different, this is what makes us interesting. But while our goals, objectives, resources, and our paths to success might be different, there are steps we can all take to reach our different destinations. The fundamental step is making a plan, following the steps discussed earlier will help you get to the finishing line in the shortest time possible