You cannot create a financial plan until you are aware of what you desire to accomplish with the money, so whether you are making it by yourself or teaming up with a financial consultant, the plan must start with a list of goals. Financial goals can be small or big, but they will help you organize the strategies needed for attaining the money within a specific time period.
Kavan Choksi on the types of financial goals
According to business and finance expert Kavan Choksi, there are three types of financial goals to pay attention to. The first is the short-term goal that you hope to attain in the following five years, like, for instance, purchasing a car or paying off a loan. The second type of goal is the medium-term one that you plan to achieve in the following five to ten years, like, for example, the down payment for a home or starting a business venture. Last but not least, the long-term goals are those ones that are about ten or more years ahead, for example, retirement or college for your kids.
For every goal you set, specify a date and a targeted dollar figure. If you are specific with your goals, the easier they are for you to attain with progress. There are a host of online resource tools that help you with the numbers. With them, you can weigh the competing financial priorities and determine what is the best course of action to fulfill them. If you have several financial goals to work towards, you can take help from a Robo-advisor or an investing platform that is automated in nature to help you weigh the significance of every purpose by ranking them as per needs, wants or wishes.
What is the best time for establishing the financial management plan based on your goals?
Ideally, you should begin investing for your financial goals early. However, any time is appropriate for you to evaluate your present financial position to assess how you are doing. Check to see whether you are on track, whether you have other goals that in the past you this not consider, and whether you hold a financial plan that helps you to evaluate where you stand now and where you want to head next.
The importance of a net worth financial statement
Every financial management plan requires a baseline; so the next step is to do it determine what your net worth is. Create a list of all of your assets like real estate, investment and bank records, any personal property values in nature, etc., and another one with a list of your debts like student loans, mortgages, credit cards, etc. The sum of your assets minus your financial liabilities determines your net worth.
According to business and finance expert Kavan Choksi, never be worried if your financial liabilities exceed your assets. It is not an uncommon practice for most people, especially if they have student loans and a mortgage to pay back. Once you have determined what your net worth is, you can use a budget calendar to plan to spend better and know where your money is going.