Financial planning in today’s shifting economy is more important than ever before. Even from a young age, financial planning needs to be given high consideration by those looking for a secure future. Financial planning is not just important for those earners in high income brackets, but even for those new to employment. Financial planning is a critical activity to ensure that needs are met no matter what uncertainties the future holds.
When working out a financial strategy, individuals need to look at their finances and future goals on a holistic level. For example, first home buying may not be on the immediate horizon but for most people it’s a long term goal. Planning ahead for large purchases like this, while paying close attention to short and mid-term spending is an essential part of financial planning.
The biggest advantage that anyone is going to receive from financial planning is added security. Controlling spending and making an investment in savings, even on a modest scale, will provide security during unexpected events and provide options for future purchases and investment.
There are five key aspects to financial planning that are effective at any stage in life, however the benefits will be felt most when this type of planning begins early.
- Budgeting: Budgeting is the essential aspect of financial planning that will enable an individual to live within their means, while creating options for savings. All expenses must be identified and allocated against an income. Things that fall outside of the budget are not realistic, and on low incomes, concessions need to be made to allow living within available means.
- Repayment of Debt: Debt is not sustainable nor does it fit in to a sound financial plan. Personal debts should be settled, and repayments allocated within a budget.
- Savings: Savings may not be possible on a modest income, but a savings plan should be put in place whenever possible. Someone setting their financial strategy should aim to save even a small percentage of their regular income within a high interest account which penalizes withdrawals.
- Future goal planning: Identifying goals helps to maintain a strategy of saving and budgeting. By setting goals, it puts the financial plan in to perspective and creates motivation to adhere to the plan. Retirement should also be thought about at this stage, and making savings and investments can help to plan for retirement.
- Investments: Investments should be factored in as a long term plan to generate profits and financial stability. Investments can be made short term or long term to grow savings and provide future financial security.
Whenever you’re thinking about a financial strategy you will need expert assistance. Ultra Fin is a financial advisory firm who works with a portfolio of clients from all walks of life, and from many different stages of financial health. Talk to us today to find out how we can turn your current financial situation in to a stable future for you and your family.