financialtreat – will explain How to Make a Financial Plan? Let’s Check out the Review! Which you will get in the following article. Let’s look at this article carefully!
financial plan – By creating a financial plan and managing the money you have, you can be sure you already have a solid foundation to build healthier finances throughout your life.
Maybe you have already started some of the steps, or not at all. Take it easy, because I have summarized how to create a financial plan that you can apply in everyday life. Let’s get started!
How to Make a Financial Plan? Let’s Check out the Review!
Set Your Financial Goals
Having a strong reason to save hard-earned money is an excellent first step. This financial goal is personal, meaning it is in accordance with the needs you want to achieve. For example, for the initial deposit of Hajj, Umrah fees, children’s school fees, and so on.
If you have set a financial goal that you want to achieve, then calculate how much money is needed to achieve this goal. After that, determine how long it takes you to reach that nominal. Thus, you so have a clearer reference to how much money you have to save in one month or a year to achieve the goal.
The COVID-19 pandemic seems to make everyone aware of the importance of emergency funds. Now it is proven that all the plans you make can fail instantly due to things that cannot be estimated. This is why having an emergency fund is so important. The most recommended amount of emergency funds is 6-12 times the monthly routine expenditure.
As explained in the previous point, saving for an emergency fund should be done from the beginning of the month. Believe me, this is a crucial step that you must do to have healthier finances.
Manage Your Debt
Understanding and managing debt is an important part of creating a financial plan. Know that debt is not a problem, but poor management is often a problem. So what should you do to manage debt?
In accordance with sharia, debt is an obligation. That is, the debt must be settled as soon as possible so as not to cause a larger mudharat. So, if you have a chance to be able to pay off the debt faster, then do it. Although often faster repayment is subject to additional costs by the creditors, faster repayment is the most recommended option.
In addition, financial experts recommend that the debt ratio does not exceed 50 percent of income so that you can still pay off the debt without compromising other primary needs. Perhaps this ratio could be your guideline before taking on new credit.
Protect Yourself with Insurance
Life can change in an instant. People with a good financial plan not only expect the best but also have a plan for the unexpected. These unexpected things are what make insurance even more crucial.
By having insurance, then you and your assets will be protected from financial risks arising from unexpected things such as accidents, damage, loss, and so on. As a result, your financial condition can remain stable.
Plans for Retirement
Even if you are young, you should think about how your retirement will be. An easy step to prepare for is to imagine what kind of retirement you want to be.
If you want a quiet retirement without debt and other financial burdens and have enough funds to enjoy old age, then make a plan right now. One way that you can retire quietly is to have investments whose returns can cover regular expenses.
In addition, as mentioned earlier, having insurance can also make you free from financial risks. Thus, the money you collect can be used to enjoy life. Do you understand? This is the best time for you to review your financial plan.
Do you need to re-examine your financial plan?
You can also re-examine your financial plan at least once a year or after major life changes such as the following:
- Significant revenue changes
- Job changes
- Changes in family dynamics such as giving birth or adopting children, marriage, divorce, or the death of a spouse.
- Selling or buying a house
- Getting an inheritance
- Unexpected debt
- Changes in financial goals
What Are the Benefits of Having a Financial Plan That You Can Feel?
Live More Efficiently
The first benefit of a financial plan is that you can live more frugally. Making good financial planning can make you able to live more regularly and disciplined such as breaking the habit of shopping for things that are not too important and not needed.
Thus you can live more efficiently and know the more important life priorities. If the savings are budgeted at the beginning then it can help you live more efficiently because you must be able to use the remaining money to meet the needs of life.
Have More Savings
The benefit of the next financial plan is that you can have more deposits. After living frugally, you automatically have more savings that can be saved and used for investment as a future capital. Of course, your life will also be calmer if you have an emergency fund obtained from the income collected.
Live a Quieter Life
Well, the benefit of the next financial plan is to provide peace of mind in your life. By managing your finances well, you can also live a quieter life. There is no longer such a thing as a month of responsibility and must find a loan at the end of the month to meet your life needs especially if you have debt installments that must be repaid.
Helping to Realize Dreams
In addition to the 3 benefits of the financial plan above, the next benefit of a financial plan is that it can help you to realize your dreams or financial targets. After doing good planning, it’s time to reap maximum results and you can realize the dreams that have been planned in advance.
Anything that is planned well will produce maximum achievements including family finances. Undercooked planning will have a negative impact on your finances, it could be that your money will run out before the time for income or payday to arrive.
Protecting the Family
For those of you who already have a family one of the main goals of making financial planning is to protect them and meet all their needs such as tuition fees and others. The cost of schooling children today is one of the largest expenditure posts, for it needs protection early on by budgeting children’s school funds both through savings and education insurance that can be taken at a predetermined time.
Having planned finances can also help you prepare a budget in the future and can reduce the risk of going into debt to make ends meet. So you will not experience a large peg than the pole. In addition to doing good financial planning, you also need to always be grateful and live happily with what you have today.
If your finances still feel less the first thing to do is to improve cash flow by maximizing the source of income. The easiest way is to make regular spending posts every month to obey. The next step is to increase income by finding additional work, if this is difficult to do you can start by living frugally.
Reducing the Debt Budget
Planned finances will allow one to prepare a budget for the present and the future. That way, when the time comes, the amount of money has been prepared so that it will reduce the risk of panic to debt.
By not having debt, family finances will be more well organized and the mind calm. Planned finances will make a person usually have a budget for unexpected moments. Therefore, if we are in a desperate condition, then you already have a sufficient amount of funds, so you do not need to owe.
Saving Money for Emergency Purposes
The need to save money for emergencies is important for a person. The reason is, that emergency conditions can happen to anyone without knowing the time. Of course, we need special preparations to deal with these conditions, one of which is to have a financial budget or emergency fund.
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The budget is needed so that these moments occur, then the preparation is mature. Then, one can be calmer in the face of such conditions. The existence of finances prepared in times of emergency can make a person avoid debt. Especially if you owe loan sharks because they are too panicked and need large amounts of money and narrow time.
Avoiding loan sharks is something that is very important not to do because it can threaten your financial condition. So the article I can make about how to make a financial plan is hopefully useful, thank you.