Your starting point will be from the financial review you performed in Step 1. Generally, tasks that are open-ended never get completed while ones with specific milestones are more likely to see traction. However, if you’d like to buy a house, then maybe your time horizon is more short-term as in the next 6 to 12 months.Īssigning a due date also makes you more likely to accomplish your goal. This will be completely unique to the outcome you’d like to happen.įor example, if you want to retire, then you may have years or even decades to work with. With your specific goal in mind, the next thing to do is to put a timetable behind it. This will help keep you more motivated to stick to the plan and continue making contributions – even when the markets are doing poorly. What’s important is that you know your reason and you internalize it. You might be investing because you’d like to: What’s the most important outcome you want to come from your investment plan? Remember, not everyone has the same goals or needs when it comes to money. This includes any:Ĭollectively, this step will reveal how much money you have, how much you owe to other people, and how much you truly have to work with. This will be the basis for your assets.Īt the same time, perform the same action for your debts. Write down how much you have in each account. This can be done by conducting a small audit of all the financial statements you have for: When it comes to financial management, the first step is always to get a snapshot of where you stand currently. To do this effectively, here is a step-by-step process for how you can create a solid financial plan. Not only would you run the risk of not hitting your goals, the worst-case scenario is that you may lose everything you ever put into it.įor these reasons, it’s critical to strike a balance between taking action while also being mindful of the potential pitfalls. However, investing isn’t just something that can be done arbitrarily. The importance of one cannot be understated – it’s how you can turn a little bit of savings with every paycheck into money that could potentially cover your living expenses for the rest of your life. An investment plan is something that every adult needs.
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