Assuming that you have managed to get yourself out of debt, the next thing you need to do is come up with a financial plan. A lot of people are ignorant of the potential benefits of a financial plan, and what usually happens after a few months or years, is that they start doing what got them in financial problems in the first place. As they say, old habits die hard. To be on the safe side, sit down and come up with a financial plan that reflects you current economic circumstances, and be sure to be reviewing it every so often to keep up with the changes in your life, and in a few years you’ll appreciate all the sacrifices you have made to be where you are. Matt Zavadil explains in the following article why a person without a financial plan is doomed to struggle financially.
Having a personal financial plan is imperative if financial abundance is important to you. If you don’t have this plan, then you’re not going to be on track for what you want. It can seem that it’s a little boring to attain financial prosperity. Getting there isn’t all flash like you see it portrayed in the movies. You need a plan to steadily increase your wealth year after year.
Of course, once you create a financial plan, follow it through for a few years, and then begin to realize the fruits of the plan, there’s absolutely nothing boring about the results. Just be sure you don’t fall into the “get-rich-quick” crowd. Develop your personal financial plan and then just work it.
The first thing your financial plan should show you is exactly how much money you must save in order to live the type of retirement you desire. One of the questions your financial planner needs to know from you is how much income you’ll need once you’ve retired. Once he or she knows this information, they must come back with a spreadsheet that shows you how much you’re going to have to save. This number is your financial independence number. Once you know the lump sum required to retire on your terms, you’ll then know how much you must save each month in order to meet the goal.
Key information, indeed! How many people do you know who know their personal Financial Independence Number? Is it any wonder 90% of the people out there reach retirement age completely and utterly broke? Yes, if you have a family, you must pay for life insurance. When you create a financial plan, you can’t skip this part. Income replacement is what life insurance is all about. If your family needs your income while you’re alive, what in the world makes you think they won’t need it if you’re dead? Since term life insurance is cheaper per thousand than whole life or variable life insurance, term is the way to go here. Multiply your annual income by ten and you’ll be pretty close to how much term insurance you need on yourself.
Getting out of debt is huge for your future. Go find another planner if yours doesn’t bring you a complete plan that includes planning to get out of debt. Your future financial abundance depends on your ability to pay off your consumer debt, and then your ability to stay out of debt. Don’t fool yourself on this fact.
Finally, your financial planner should spend some time going over your budget, and then offer you some ideas and ways to adjust that budget in ways that can free up money that you can then contribute to your retirement, life insurance or debt elimination needs. You can absolutely have financial success after you’ve planned correctly.