A Financial Plan: What It Is, And How It Can Help You

There is an old saying that goes; if your destination is ‘anywhere’, any road can lead you there.

Having no financial goals to work towards creates a profound sense of disorientation and can keep you running in circles until you end up right back where you started.

If you are on a road trip, the various signs and milestones will help you know whether you are actually heading to where you intend to go, and should you suddenly discover you have taken a wrong turn, you will inevitably take a U-turn to get back on track.

When it comes to money, a good number of people fail to take the needed U-turn after they realize they are on the wrong financial track.

Just like the road trip, people spend an awful lot of time planning holidays, parties and events than they do their finances.

Not knowing where you are and where you want to be when it comes to money is a tell-tale sign that you may be heading for a financial disaster. One way to ensure you will get to your destination is to have a clear financial plan.

A financial plan

When you know precisely what you want to achieve financially, it will be a little easier to know whether the road you are on will take you to where you want to get.

For instance if you are looking for financial independence, you are very unlikely to get there by spending more than you earn, or merely settling for work far below your skills, education and ability, simply because you need the money to survive.

Most financially successful people are able to tell you where they want to be in 10 years’ time and will tell you precisely how what they are currently engaged in fits into the overall plan.

Setting clearly defined long-term and short-term goals will help you focus on what is important to you.

Before you embark on a journey, you will usually have a clear idea of where you are going and how you intend to get there. You will also choose the best and most convenient means to get to your destination.

You would never consider cycling to be the fastest means to get you from one country to another if you were aware that an aircraft can get you there faster.

But people do it all the time. Why? They focus on cycling away at random until they grow weary, wondering why the journey is endless.

You can have whatever you want out of life within reason, for as long as you adequately plan for it.

The starting point is knowing where you want to go, evaluating the alternative options available to you, and then choosing the one that will get you there faster, safer or at your convenience.

Hopefully this has given you some insight on the importance of having a clear structured plan for your finances. If you haven’t already done so, click here to discover how to create your own financial plan in four quick and easy steps.