Change your region Coonabarabran

The importance of setting a financial plan

<p>A financial plan is a way of getting you from where you are, to where you want to be. If you dream of freeing yourself from debt, owning your own home, being able to retire in comfort, paying for your children&rsquo;s education &ndash; or anything else for that matter &ndash; then a financial or &lsquo;money&rsquo; plan makes sound sense.</p> <p>Personal financial planning should be holistic &ndash; in other words it should take into account your complete situation. It should also minimise your risk and provide you with the structure to achieve your financial aims. Crucially, it should concentrate not on &lsquo;finance&rsquo; but on you and what you want. What are your dreams? What are your ambitions? Where do you want to go to in life?</p> <p>So stop thinking about money for a few minutes. Instead put your mind to what you really want. Dream a little and while you dream, try and come up with answers to the following questions:</p> <ul> <li>What would you like to be doing in &ndash; say &ndash; five years, 10 years, 15 or 20 years? </li> <li>What work &ndash; if any &ndash; will you be doing? </li> <li>Where do you see yourself living? </li> <li>How do you imagine spending your leisure time? </li> <li>What is your family situation? </li> </ul> <p>Financial planning has one objective: to make your dreams come true. It does this by taking all the different things you want and then identifying all the different things you need to do to make them happen.</p> <p>What should go into a money plan:</p> <ul> <li>A description of what you want &ndash; your financial goals. </li> <li>A description of what you have already achieved in money terms along with what you anticipate achieving in the future. </li> <li>The different actions you need to take to realise your ambitions. </li> </ul> <p><strong>Ages and Stages</strong></p> <p>When trying to sort out your financial objectives it may help to divide your life into different phases.</p> <p>Young and free: When you are young you tend not to think too far into the future. Your financial priorities should include:</p> <ul> <li>Creating an emergency fund to cover unexpected expenses. </li> <li>Paying off any personal or student loans. </li> <li>Short-term saving for cars, holidays and so forth. </li> <li>Income protection insurance in case you are unable to work for any reason. </li> <li>Starting a pension plan. It is never too early! </li> <li>Saving for major purchases &ndash; such as a deposit to buy a home. </li> </ul> <p>Family life: If you settle down with a partner your financial priorities will almost certainly alter &ndash; especially if you have children. By the time many people settle down they have already built up sizeable debts. Where this is the case becoming debt free must be a priority. During this phase you may be thinking about:</p> <ul> <li>Creating an emergency fund. </li> <li>Protecting both your incomes (if relevant) in case you are unable to work. </li> <li>Life insurance for both you and your partner. </li> <li>Buying a home with the help of a mortgage. </li> <li>Planning for education fees (if you have children) whether for private school or university. </li> <li>Retirement planning </li> <li>Short-term saving for cars, holidays and so forth. </li> </ul> <p>The middle years: Financial priorities in your middle years will vary according to how much money you have earned during your 20s and 30s &ndash; and how you have spent or invested it. For some it can be a period of relative affluence with a higher level of disposable income becoming available &ndash; for others it is a period of worry as retirement looms. Although pension planning should have been a priority as soon as you started work, the truth is it is not until many people are in their 40s or even 50s that they begin to consider their retirement. Providing for a comfortable old age may therefore be the most pressing need. Your priorities may include any or all of the following:</p> <ul> <li>Creating an emergency fund. </li> <li>Protecting both your incomes (if relevant) in case you are unable to work. </li> <li>Life insurance for both you and your partner. </li> <li>Paying off your mortgage and any other debts. </li> <li>Retirement planning. </li> <li>Short-term saving for cars, holidays and so forth. </li> <li>Long term care planning if you are worried that your pension and/or the state may not provide for you sufficiently. </li> </ul> <p>In retirement: With luck your retirement will be comfortable. Your debts should all be paid. You should have a range of assets, not least your own home and a pension fund. You should have spare cash to indulge your chosen leisure activities. Now your priorities are likely to include any or all of the following:</p> <ul> <li>Creating an emergency fund. </li> <li>Funding any benefits lost due to retirement such as health insurance or a company car. </li> <li>Long term care planning. </li> <li>Tax planning. </li> <li>Investing for income or finding other ways to boost income.</li> </ul>

Advertise on OurPatch

Are you interested in advertising on OurPatch? Know what your options are. Request information on your advertising options.

Copyright OurPatch 2007-2018 [2.0] Rails 3.2.11