As with anything in life, planning is key to a brighter future. A financial plan provides a road map of where you want to go in life. But before you can make a plan, you need to have some goals
An ideal family plan should have short-term (in the next 6 months), medium-term (within a year), and long-term (within 2 years) goals.
For a goal to work, it needs to be both specific and sensible. Example: I don’t want to just “buy a new car” I want to drive an Audi R8 Spyder; but an A3 is more in my price range ($100k less!) and is a realistic goal.
Once you have them all written down, you can weigh the importance of each goal and prioritize according to urgency. Then estimate how much money it will take to reach each goal and set a target date. Without a time frame you can’t really measure your progress.
When you know how much money you want to save and how much time you have to save it, you can develop an action plan for achieving your goals. There are multiple ways to achieve a goal; maybe you want to save a certain amount of money each month or find different ways to cut expenses.
Keep in mind that this is a continuing process that involves revisiting your goals periodically to ensure that they are still what you want from your life. In between reviewing and adjusting your goals, let them go! Give yourself permission to be flexible and to let go of the need to obsess over your goals.
After creating your financial plan, you will be ready to build a budget that can help you reach your goals.