Basic Financial Planning

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Financial planning. Perhaps one the most important things you can do to ensure the future you so love to dream up. So why do people avoid it?



Mainly because we fear that which we don't understand.



So let's break it down to the basics. When we talk about ''Financial Planning'' we are talking about a few different things.

Submitted: June 21, 2018

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Submitted: June 21, 2018

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Basic Financial Planning
The following is an article “Basic Financial Planning”

by Marc Primo Pulisci.

 

Financial planning. Perhaps one the most important things you can do to ensure the future you so love to dream up. So why do people avoid it? 

Mainly because we fear that which we don't understand. 

So let's break it down to the basics. When we talk about ''Financial Planning'' we are talking about a few different things.

Budgeting, expenses, debt, saving, retirement, and insurance among others. 
Learning these separately while understanding how they can work together is the best way to remove the fear that comes with the unknown. 

01  Budgeting

Everyone knows or should know how important a budget is, and yet only 1 in 100 take the time to budget out their plans. A budget is merely a plan that lays out how you will be distributing your money every month. It lets you see the birds-eye view of the income vs expenses. Going through the trouble of writing it out and giving this some thought may sound irrelevant but the truth is when we don't do this many of our actions regarding money tend to be unconscious and uninformed. People end up spending more than they make in many cases. Having a budget allows you to be aware of your situation and it makes it that much easier to restrain yourself on unnecessary purchases. 
Saving money requires a monthly surplus so keep that in mind when writing up your budget.


02  Cutting Down

With your budget in mind, you will have a clear picture and better understand where your priorities should lie. This is exactly the kind of information you need to make the hard choices, like what to trim down or cut from your expenses. This is harder for some since we live in a consumer society. You might have to take a hard look at your life and admit to yourself some hard truths. Taking an interest in minimalism usually works out for the best when trying to cut back.

JOSHUA BECKER wrote a great piece on how to make minimalism a holiday tradition. By making it a family event, this can be a healthy and fun way to reign in expenses.


03  Pay Off Debt

Even if you get organized and start being financially responsible you could be one the millions that have lingering and suffocating debt. Getting rid of this debt should be priority number 1. This may take a few harsh steps but really its just temporary. The sooner you handle this issue, the better. Making sacrifices and going without may seem humiliating or even devastating to some but once you actually do it you realize it is not the end of the world. It also feels great when you start meeting your financial goals. For a more in-depth view on how to take care of debt check out our article here.

04  Saving 
 
You should have noticed by now financial planning is all about looking at the long term. We are eternally stuck thinking about yesterday today and maybe even next week but more and more we seem to have trouble thinking longterm. Long-term means years or even decades ahead of time. Your actions today can have very serious financial consequences or benefits for your future self. So be nice to your future self and start saving today.
There are many ways to save and you should not limit yourself to just one. Just think about how many 401k plans have gone under because of a few bad decisions. Never put all your eggs in one basket. Roth IRA accounts are one of the most efficient ways to save up. Check out our guide here.

05  Insurance

The news might try to make you feel like we are living in crazy times and the truth is we are. It is also true that they have always been this way and will continue to be. Humanity has cycles of prosperity and economic crisis, and during both, there are those that manage to stay afloat and even grow. It is up to you how to prepare for unplanned events. Insurance, as dull as the subject may be, can be a lifesaver.

All your hard work and planning can crumble down in an instance when disaster strikes. A fire a bad diagnoses a flood. One never knows, the right insurance can mean the difference between financial ruin and sticking it out to overcome a dangerous situation.


© Copyright 2018 Marc Primo Pulisci. All rights reserved.

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