What is the best way to achieve your financial goals? A Financial Plan is like a road map, and is essential to managing your money effectively. It consists of four components:
Budget: A plan that shows how much you earn, spend, and save each month. You can keep track of your income and expenses, identify your needs and wants, and show how you’re balancing your spending and savings.
Savings Plan: A plan that shows how much money you save each month for each of your goals. This helps you prioritize your goals, allocate your income, and build your savings.
Debt Repayment Plan: A plan that shows how much money you pay each month to reduce debts. Knowing how you’re going to pay back your current debts will help you lower your interest costs, improve your credit score, and free up cash flow.
Investment Plan: A plan that shows how much money you invest each month to grow your wealth and achieve your long-term goals. This shows you how you can diversify your portfolio, balance your risk and return, and take advantage of compound interest.
It’s always best to go over your plan regularly to see what can be changed and where your funds can go once you reach certain financial goals.
