- March 10, 2020
- Posted by: aarfinancial
- Category: Economics
A financial planner is a person you hire to help you with your financial planning. He will help you to plan for specific goals such as retirement or investment. He will also advise you on financial issues such as taxation, savings, and insurance. Wise people usually consult their financial planners before making important financial decisions. However, if you learn to manage your own finances, you can understand and control your financial situation while saving the consultation fee.
1. Identify Your Key Goals.
Before making a reliable financial plan, you must figure out your goals – including personal goals and financial goals. Common financial goals are preparing for retirement, paying the tuition fee, buying a house, leaving a legacy for a beneficiary, or setting up an emergency account for unexpected expenses.
- Grab a piece of paper and write down your goals. Don’t afraid to be a little bit creative!
2. Your goals should be precise.
Make sure your goals are in line with SMART principles, that is, specific, measurable, attainable, realistic, and timely.
- For example, you may not have a deposit at the moment, and you set up a goal to save more money. Saving money is an excellent goal. But simply “saving money’ is too broad and vague. If, instead, you change your goal to deposit 5% of your monthly income, then your goal is not only specific but also measurable (you can easily know whether your goal is achieved or not). It is achievable within a reasonable time frame.
- Grab another piece of paper and rewrite your goals now. You do so to ensure that you keep your goals in mind and this will urge you to take responsibility of your goals. It’s a good idea to specify the goals you have just written down to short -term goals, medium-term goals, and long-term goals to establish a good management system of your own.
3. Determine the amount you need to achieve your main goal.
To ensure that your financial plan is effective, quantifying your goals is very important. Which is to say, set a specific target and convert it into numbers.
- For example, a common financial goal is to retire at 60 or 65. A lot of people think that it is enough the make retirement income reach 70% to 80% of the current income they have. Some suggest that a safer estimation should be 50% to 60% of the couple’s combined income and 60% to 70% if you are single.
- At this point, you may be overwhelmed by all sorts of information with different sayings. It’s fine. Financial goals vary from person to person. Carefully analyze your needs and set up the goals is the only way to customize successful financial planning for yourself.