Financial planning takes consistent effort and continuous learning so you can have peace of mind and security for your future. You need to know how to manage your money, control your expenses, and build your savings to realise all your plans and goals in life.
In fact, more people consider being financially prepared for future needs and unforeseen circumstances as a success indicator more than having a high income.
The Financial Planning Pyramid
The pyramid is a great approach to planning your personal finances as it helps you cover your bases and leads you to the next steps after that. Here are some ways to make every step more beneficial to you.
Budgeting the Basics
Of course, your basic needs or monthly obligations should be the first thing you plan for. Surprisingly, not everyone takes control of their budget. That’s why it’s easy for some to fall into a debt spiral or not have an emergency fund ready.
The rule of thumb is to determine a percentage of your income as your monthly budget for basic needs and stick to it no matter what. Experts recommend allocating 60 to 70% of your income for basic needs.
Securing Your Protection Needs
There’s no good financial plan without having a base for your protection needs. This includes your emergency fund in case of medical emergencies and life insurance to safeguard your entire family from potential financial loss in case something of untimely death, disability or critical illness.
This comes as the second level of the financial planning pyramid to give you a strong foundation. This way, all your savings and assets will be saved by your emergency fund and insurance coverages if ever faced with the uncertainties of life.
Savings for Tomorrow
Savings goals span from travel and leisure to getting a new car and from education to retirement. The key is to determine which ones are short-term goals and which ones are long-term. This way, you can prioritise all of them and allocate the right amounts within the right duration for you to achieve them.
Investing for Greater Growth
Once you get a hold of your basic needs, protection needs, and savings, the next step is to strengthen your finances even further by investing in the right assets and business opportunities. Hiring an expert specialising in investment management here in Guildford to help you seek out the best opportunities for asset building will give you a great head start.
Investing comes with a lot of risks, so having an expert opinion can do you wonders.
Following the financial planning pyramid and banking on your strengths will definitely lead you to the top, which is legacy building. This is a level wherein you have financial security not just for you but also for your entire family. The next step then is to build a legacy for yourself, a name that will stand the test of time.
Your legacy relies heavily upon your personal life mission and the impact you want to have in the society beyond just financially.
Financial planning can be difficult and stressful, especially if you’re just starting to build yourself. However, it is absolutely necessary if you want to live life to the fullest and give the absolute best for your loved ones.