YEAR 2018 is about to end. Have you hit your financial targets yet?
“If you don’t know where you are going, it does not matter which road you take.”
While many people believe this to be true, “any road” can spell financial disaster. This is the reason why we need to take time to plan and make a financial roadmap so we can be assured that the road we take is the best route to get us to where we desire to go.
Some want to be…Financially stable…Save enough money for education…Retire one day
All these goals are great but not having a financial roadmap and a clear direction of achieving these goals can leave people at a loss.
In order for us to achieve our financial goals, we need to create strategies and work within a timetable, we need to plan on what approaches are best and helpful to us. Making a financial roadmap will help us value how our financial decisions will influence the other areas of our financial life.
Furthermore, when we grasp the importance of every financial decision we make, we become determined to look for courses of action to pull off our goals.
Here are five steps on how we can make our financial roadmap work:
- Establish financial objectives or goals
Everyone has varied identified goals and priorities depending on where they are in their life stage. People in their late 20s could be looking forward to settling down and planning for a family, those in their 30s could be considering having children, while those in their 40s could be thinking of business opportunities to provide for their children’s college education as well as an after-retirement source of income.
Whatever stage we are in our life, it is imperative that we identify our goals and objectives that are SMART – specific, measurable, attainable, realistic, and time-bound.
This means that those in their late 20s planning to settle down need to determine how much a wedding would cost, those in their 30s need to decide how many children they are able to raise, considering all the factors in raising children while those in their 40s need to examine the different business opportunities that can work for them – all of which are dictated by a specific time-frame to make these goals achievable.
- Diagnose your current financial situation
After identifying the goals comes the need to diagnose the current financial standing. It is equally important to see the entire picture of our finances.
How are we doing in terms of savings? Is our salary supporting our expenses? Are we currently in debt? Have we already acquired financial assets?
These are only some common questions that we asked ourselves when we evaluate our financial status. Our financial statements can also help us in the evaluation process, they can show us different points for audit that help establish our monetary ability and stability.
- Identify financial planning options
After establishing the financial goals and diagnosing the current financial standing, we can now identify financial planning approaches that can help achieve our goals and change our financial status to our advantage.
Is there a need to save more? To invest? Is there a need to recalibrate the monthly budget to make room for more financial growth?
Choosing the types of approaches to achieve the goal will always depend on steps one and two identified earlier.
- Set your financial plan into action
Some people believe that making a financial roadmap work can only be successful when their action plans are set in motion. While that is true, another important element that needs to accompany these action plans is consistency.
People who want to be successful at implementing their financial roadmap need to embrace consistency when it comes to its implementation otherwise, these will only be a list of to-do’s that are never done.
- Keep your eyes on the road
Lastly, it is important to monitor the financial roadmap. Are there changes in the goals and objectives? Are there improvements in the financial inflow? Are there certain action plans that are not doable? Are there other effective approaches that you want to try in managing your money?
Evaluation of the financial roadmap is very important if we want it to be successful. Schedule a review of your financial roadmap every six months to check for changes and other relevant revisions.
THINK. REFLECT. APPLY.
What is your plan this coming 2019? Do you have a financial roadmap in place?
