This article discusses the importance of the Lifetime Financial Planning to one’s personal money management strategy.
Lifetime Financial Planning
Most of us have budgets of some kind and have an idea of where our money goes every month. However, sometimes budgets just don’t work. Why? Because there is usually more than just one person involved in the family budget and personal priorities and outlooks on spending money can vary greatly.
Implement a General Money Management Strategy
Toss in the odd personal life change such as job loss, unexpected pregnancy, illness, or injury, and you can have instant financial chaos. Planning ahead and looking strategically at spending can reduce your stress about the family budget.
You probably know couples who have comparable salaries but have substantially different assets and spending patterns. The difference? If you want to have financial security, you need to have a plan of action. It should be updated every time your circumstances change and every time you look at purchasing a big-ticket item.
Knowing where you are going financially and choosing your course of action will make a big difference in how you can plan for your future and your retirement. Would you take a trip to a new destination without a map? Would you just hop in the car and hope that you get there eventually? Think of your lifetime financial plan as a financial road map, with the ups and downs of life’s financial challenges as detours or freeways, depending on what’s ahead.
Some planning basics require that you find out what your financial goals are. In the next year, where do you want to be, financially? How about five years from now? List your priorities. What is really important to you? For some, it might be a nice home, and their priority would be to allocate top dollar to buying an attractive home in a nice area. For others, cars, recreational property, or entertainment might be most important. There is no right answer, just the right choice for you.
This is the time to sit down with your partner and discover your financial direction and priorities together. You can’t do it alone. Unless couples work together to establish financial priorities, relationships can suffer. How many people have argued about joint chequing accounts, or purchases where both weren’t involved in the spending decision? How about budget sabotage? Do these issues sound familiar?
Always Plan Finances in Advance
List your priorities and how much money you will need. Understand your income, not what you’d like to make or your gross income, but your after-tax paycheque. Look at your assets and debts, how can you work with these creatively? Need advice? There are many reputable financial planners, debt counseling agencies, bank officers, who will help you develop your personal lifetime financial plan.