10 Steps to a Successful Financial Plan


What Is a Financial Plan?

A financial plan identifies, organizes and prioritizes your financial goals, then shows you the steps you need to take to achieve them. If your plan is put together right, it can also lend some insight to see if you’re on track to meet your financial goals or if you need to make adjustments to your spending. A financial plan can revolve around consolidating debt, opening bank accounts, budgeting to save, or building an investment plan.

You can decide how long your financial plans will last, depending on your goals. Jason Vanclef, CEO of Vanclef Financial Group, Inc., believes that anyone can succeed financially if they have the right tools.  By creating a financial plan, you can be assured to have better preparation for the future.

10 Steps to a Successful Financial Plan

Decide your goals

This has to be your most important step. So that’s the first thing you should ask yourself. Decide what your short and long time goals are. What do you want to accomplish in the next 5 to 10 years? What are you saving for long term? You need to get really specific about what your goals are and write them down.

Create your net worth statement

Another important step of a financial plan is to find out what your net worth right now is. First, make a list of all your assets—things like bank and investment accounts, real estate and personal property. Then, make a list of all your debts: mortgage, credit cards, student loans. Subtract your liabilities from your assets and you have your net worth. This lets you know if your in the plus or minus.  If you’re in the minus, don’t worry, it’s common for those just starting out.

Review your cash flow

What is cash flow? That simply means money in (your income) and money out (your expenses). List all of your income sources. How much money do you earn each month? Now look at what you spend each month. Don’t forget expenses that may only come up once or twice a year. This is a great way to see if you are overspending or doing great with saving.

Design a budget

After figuring out your cash-flow  you will know what you’re spending. Write down your essential expenses such as mortgage, insurance, food, gas, utilities and all loan payments. Then write down nonessentials—restaurants, entertainment, etc. Does your income cover all of this with money left over? Are you putting away any money in your savings? When you look at your expenses, it helps you plan and budget.

Start a debt management plan

High-interest consumer debt like credit cards can hinder your financial plan and something you want to avoid. Look at each specific debt to decide when and how you’ll systematically pay it down.

Think about your retirement savings 

It’s never too early to include your retirement saving as a part of your financial plan. In fact, the earlier you start, the less you’ll likely have to save each year. When you start saving early, even a little bit over time can make a big difference.  Save what you can and gradually try and increase your savings rate as your earnings increase.

Don’t forget about your portfolio

Market ups and downs can have a real effect on the percentage of stocks and bonds you own. Don’t be fooled by thinking you are fine with an up market. That can throw your portfolio out of alignment. Be sure to review and rebalance on an annual basis.

Do you have the right insurance?

We all need health insurance, car and/or homeowner’s or renter’s insurance. Having the right insurance coverage can effect your finances. If you have disability insurance while working, it can help protect your future earnings and ability to save. Consider a supplemental umbrella policy based on your occupation and net worth. You should also consider life insurance, especially if you are married and/or have dependents. Check your policy to make sure you have the right type and amount of coverage.

Know your income tax situation

The Tax Jobs and Cuts Act of 2017 changed a number of deductions, credits and tax rates beginning in 2018. And that caught a lot of people by surprise as they filed last year’s taxes. For instance, standard deductions were increased significantly, eliminating the need to itemize for a lot of people. To make sure you’re prepared for the 2019 tax season, review your withholding, estimated taxes and any tax credits you may have qualified for in the past. The IRS has provided tips and information at https://www.irs.gov/tax-reform. Taking advantage of tax sheltered accounts like IRAs and 401(k)s can help you save money on taxes. You may also want to check in with your accountant for specific tax advice.

Reevaluate and Revise Your Plan

Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions.

When life events affect your financial needs, your financial planning process will need to adapt to those changes. By regularly reviewing your plan, it will help you make adjustments that will bring your financial goals and activities in line with your current life situation.


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