Long Term Financial Planning Tips

Long Term Financial Planning Tips

Long term financial planning tips-It often happens that financial planning tips or financial planning is appli consciously or not when someone starts to enter the world of work. Moreover, for those business owners, the regulation of cash flow affects the implementation of a goal against a certain target or time.

Keep in mind that future plans must of course be balanc with concrete actions. If a goal is just a wishful thinking without any realization then only 1 goal will not be achiev. No matter how important a target is, maximum effort must be made.In addition, any plan relat to business or personal needs to have a specific time target. Thus, there are limits or guidelines in carrying out various actions to achieve situations and conditions at a certain stage. Various efforts must be optimiz.

What Is Long Term Financial Planning?

financial planning tips

Financial planning or commonly called financial planning is a strategy for preparing personal and business funds with plann goals. Although the concept is clearly develop in order to obtain a goal within a certain period of time as a reference.

In addition, the planning process in the field of financing aims to simplify various inflows and outflows of money and assets in the household. The simplification is intend to achieve clear boundaries in each action in order to achieve the initial goal.

Thus, financial planning itself is a long-term plan that will continue to be carri out by every human being without exception. As long as the human is alive, finances must be regulat in such a way as to achieve stability between income and expenditure without a deficit.

Simply put, financial planning doesn’t just refer to business owners. Good management of money in and out must also be controll by individuals for their own sake. Especially for housewives whose job is to manage family cash.

As much as possible when preparing plans should provide emergency funds to deal with various situations. Various situations such as illness and need to be treat or other accidents will be handl properly if there is a reserve fund.

To remember, whether or not personal financial planning is important, you can consider the benefits that can be obtain. Ideally, financial planning starts at a young age. Why should it be at a young age? The sooner you plan, the sooner your financial goals will be achieve. To make it clearer the importance of long-term financial planning, here are the benefits that can be obtain.

The benefits of personal financial planning:

  • Ensuring retirement funds during old age later
  • Regulate the assets owned which will later become inheritance
  • Preparing marriage funds or anticipating the distribution of assets if you have to divorce
  • Prepare funds for child birth, adoption, and education
  • Prepare funds to deal with financial crises
  • Determine the allocation of funds for the care of elderly parents or children with disabilities
  • Anticipate desirable things such as death
  • Ensure the availability of own education funds
  • Ensuring the availability of funds to start a business
  • Have an emergency fund

How to Do Long Term Financial Planning

Implementing financial planning in your daily life means that you are responsible for the money from your income. Several unwanted things can happen to you if you are not responsible in your finances. One of them is being in debt. To avoid this situation, here are some long-term financial planning tips that can be applied to everyday life.

1. Calculate and Record the Total of All Income

Long-term financial planning tips are to start recording all nominal income received. By recording your income, you can calculate the net income you receive each month.

Of course, this income has been deducted by fixed payments such as taxes, insurance, and so on. The calculation of net salary is done to minimize allocation errors that lead to you failing to save. Recording a net salary count is also useful for knowing how healthy your financial condition is.

2. Create a Routine Expenditure Budget

After all income results are clearly record, you must make monthly expenditure items in financial planning. Make a note of what should be fixed expenses each month. Don’t miss important expenses such as installments, budget for telephone credit to your vehicle’s gasoline needs.

By making a monthly expense post, you will be able to know how much money is need each month. Apart from that, you can set aside any expenses that are not need and allocate them to other expenses or for you to save. Prepare a budget for unexpect expenses so you can be prepared if something happens within a month of traveling.

3. Determine Financial Priorities

After marriage, you must realize that the income will be one. On the other hand, spending is also increasing due to increasing needs. It is important to discuss in advance with your partner about the financial goals you want to achieve together.

For example, setting aside salaries for housing mortgage priorities, vehicle repayments, child birth costs, child education, emergency savings, life insurance, investments, and so on. Making sure you and your partner have the same priorities or can find a middle ground can help avoid disputes and financial problems later on.

4. Record all expenses in detail

Keeping records of financial income and expenses can be said to be one thing that is actually very important, but unfortunately it is often forgotten by most people. The reason is by making financial records, this can be us as personal evaluation material for making financial planning in the following month.

Making financial records like this doesn’t need to be complicat, because the most important thing is that you can understand it. In fact, if you don’t understand how to make financial records manually, there are currently lots of financial management applications that you can use to record and manage finances.

Keep track of every expense, even the smallest. With these records, you can find out where all your money has gone. With a record of expenses too, you can have a guide for managing money. You will understand what your needs are and how much it will cost. You can also see what expenses are unnecessary and can be reduc in the following month.

5. Prepare for an Emergency Fund

An emergency fund is a budget that is deliberately prepared for sudden needs in the future. Ideally, this fund is prepared for the next 3-6 months with an allocation of a percentage of 5% -10% of total income per month. Please note, emergency funds can be savings, or not. If your financial condition is good, you can distinguish between the two types of funds, but if not, then arrange it according to a predetermined budget.

6. Make Sure to Maintain Debt Ratio

Buying something you like is fun especially if it can make your mind calmer and make the atmosphere more productive. Reporting from QM Financial, it’s also best that you don’t buy various consumptive needs with debt. This consumptive need is not a long-term investment because the nature of the price will continue to fall and is not profitable in the long term.

If you really want something, then use the money that has been set aside specifically for these purposes so that it really doesn’t burden your permanent finances.

In addition, settle your debts first in a timely manner before you plan to buy anything. Debt if not resolved will become a problem and of course it can make your mind burden increase. Avoid buying various consumptive goods because they are only temporary.

Keep in mind, high-interest debt goes into the rate of return you get on your investment and can swallow up all of the income earned in a savings account. Clearing your debt will also erase your credit score for the future.