For those of you who have been through a financial crisis in 2009 and 2010 years ago, definitely not going to deny that financial planning are increasingly important. But have not enough financial planning. More important, you must be precise in formulating financial planning priorities.
Even if you have very identical financial planning tailored to the investment, there are actually priorities that apply to all people in financial planning.
For example, last week your office provides training to make financial planning for the beginner. On the second day, participants had the opportunity to consult one by one with the financial planner, and do a financial check-up as an early stage. Thus, after the training, each participant must have prepared their own financial planning that helped by financial planner.
Among the dozens of trainee financial planning is tucked several people who were able to set aside 10% more than his monthly salary. So, there should be residual cash flow of up to millions of dollars that could be set aside each year. Let’s say $ 50 million.
Apparently, you can not find the balance of the savings that should be worth at least $ 50 million. Well, where did the money is?
When making financial planning, we must start from the highest priority. Whether for investment? Of course not!
First, we must check and pay off consumer debt. Come check out the list of our debt, there are still outstanding credit card debt and unsecured credit debt balance? If there is, then this debt pay off first by saving money you have.
If you like to pay credit card bills with a fixed number, say $ 5 million per month eliminate the habit for better financial planning. We should usually repay credit card utilization, whatever the quantity of expenses.
Second, cash flow should be positive. This applies to cash flow monthly and annual cash flow. Home costs, bills, monthly costs, in addition to individual buying, should be compensated in the monthly salary. While the holiday cost, land and building tax, the cost of sacrifice, and other expenses should be paid from the fund Christmas bonuses and allowances.
If you are not a permanent employee, when he gets the money, get used to directly divide that number to 12 months. Well, how do cash flow positive?
Third, you are having an emergency fund in financial planning. After our positive cash flow, then the third priority is to have an emergency fund. When faced with unexpected needs or conditions, which contribute a lot is an emergency fund. Because the insurance function to replace the money only after the claim event is received.
Well, products to save an emergency fund of course must be a financial planning instruments that highly liquid and low risk. Like it or not, the savings is the best place to store emergency funds. If the ideal target has been reached, you can store excess cash in money market, or even gold.
Buying insurance products
Fourth, determine financial goals. The main essence of a financial planning is to have financial goals. The dreams are not the purpose of financial planning. Investment is also not a financial goal, because the investment is one strategy to achieve objectives of financial planning.
A destination of financial planning must have a target cost, duration, and strategies to achieve them. If not, that’s just a work of literature.
Fifth, put into action methods prior to financial objectives. Well, this part is a challenge for many people trying to make their own financial planning. But it is not impossible, must be carefully selected in accordance with your risk profile, financial resources, time frame and return the desired target.
Prior to determining the product, you must fill out the risk profile questionnaire. The goal is to find out whether you are a conservative (type true savers), moderate (half to save money, half the investment), or an aggressive (type of search returns as high).
Sixth, the purchase of insurance products tailored to the needs of financial planning. Interesting phenomenon of the results of a survey conducted our office is that many people have started insured. But among those very few who know exactly what insurance is bought. Insurance coverage requirements additionally ought to be important simply because we maybe not have capability to spend rates preferably. The actual purchase associated with required insurance coverage is actually life insurance coverage (for which have dependents), health insurance and general insurance.
You must comply with income protection insurance needs, and meet the need to achieve the target of investment balances with financial planning. Make sure that we are wholly-owned investment under your control. So, don’t prioritize to pay insurance premiums automatically.
Based on the exposure, you believe that every person must be able to have financial planning. By using the right priorities, life are much more stunning as well as profitable because preferred will be faster recognized.
But have not enough financial planning. We must take decisive action; Love yourself and your family by providing the best for life.