Financial planning involves far more than the making and sticking to a budget. It covers things such as emergencies and retirement as well. Even the goals that you have in life can affect your financial plan. What, goals affect finances? Yes, the goals that are had have a large impact on financial planning.
When it comes to the things that you want in life the things that you want without ever doing anything to achieve are just dreams. When you decide that you want something and make a plan to achieve it then it has become a goal. Goals no matter how small or how large are best achieved when you develop a financial plan that includes them. The size of the goal will determine how many steps you have to break it down into in order to achieve the goal.
For instance if the goal is to reduce your monthly expenses by $100 a month you have to consult your budget. The budget may not allow you to do this all at once so you might need to break it down into smaller steps. A smaller step could be reducing the monthly expenses by $100 in four to six months time. That means you reduce the expenses anywhere from approximately $17 to $25 a month until you achieve your goal.
When you reduce the monthly expenses by the total $100 a month you can have another goal set. For instance a larger goal could be to achieve a total of $1,000 in your savings. At a rate of $100 a month it’ll take you ten months to achieve that $1,000.00. This is a goal that will affect the financial planning. There are several other ways that the financial planning is affected by the goals that you have set for yourself.
The goals you set for your income will affect your financial planning as well. The amount of money that you make will have a direct affect on the amount that you are able to set aside for the goals you have. Income may cause you to realize that you need a second source of income to meet your financial planning goals or that you have to cut back on somethings to achieve the goals that you have set out.
When it comes to financial planning the goals that you have will enable you to see the bigger picture. A realistic idea of what you can achieve is contained in the budget. Financial planning to achieve goals means that at times adjustments will have to be made and you must always use your common sense when making the plan for your finances.