When setting goals in life, most people state that one of their priorities is to be successful with their personal finances. However, not all of them carry out the conscious and constant exercise of correct financial planning.
Without a good organization of personal or family finances, no progress is made; the other way around, it goes backwards.
“It is difficult to save”, say many; “the money is not enough for me”, respond many others; “No matter how hard I work, I don’t advance”, they repeat.
Perhaps you have heard these or similar phrases on more than one occasion. You may even have said them at some point.
It is common for people to have this negative perception when they are presented with the idea of having savings, of controlling spending, of creating an emergency fund.
Whether you have fixed income or variable income, you have the ability to create and adjust to a budget that balances your financial management and allows you to protect yourself in the future with better financial health than the current one.
It is true that it can be difficult to start with the habit, but what is totally true is that these are attainable goals. What you need is perseverance, discipline and, above all, planning.
A financial plan is one where we land all the details of our financial actions, where we establish real and achievable goals, and where the necessary adjustments are made to achieve the proposed objective in a given time.
Contrary to what many think, the financial plan does not only have numbers; It also takes actions to go step by step, according to what is established in that previously prepared plan.
A good financial plan should have:
- A goal . To identify your purpose in finances, we recommend evaluating what your dreams are, what your obstacles are, and where you want to go. In this way, you are able to bring the actions to your financial purpose. As the captain of the ship of your finances, the navigation map is everything to arrive at the destination.
- Relationship with your finances . Reflect on your relationship with finances: identify habits, customs, and beliefs, behaviors that have positively or negatively impacted your finances throughout your life, perhaps since your childhood. With this in mind, you can become aware of and take action on them. This is the starting point for healthy finances.
- Balance of my finances. At this point you will understand what is happening with your money, detail your income and your expenses to know the result, identify where you spend the money and possible options to reduce unnecessary expenses. There is always where to cut to save, always.
- Identify your liabilities. Knowing your debt situation allows you to have a clearer and more objective outlook to take actions in the short, medium or long term on your debts. This will give you the perspective to calculate how much time you need to reach your financial goals.
- Make your budget. Once you have identified your income and all your expenses, it is time to take action: reduce items to expenses identified as unnecessary and assign a new goal to these savings. Under no circumstances can your expenses exceed your total income. Never.
- Write down the learning of the process. Knowing how you started, what you have improved along the way and what your essential goal is in this process are some of the things you will learn. Visualizing your life in the long term will give you security, after starting your financial transformation.
Making a financial plan is complicated? No, the financial plan is a simple tool, as long as you have good advice that allows you to identify the strengths and weaknesses that may occur in the process and go ahead to find solutions to face any adversity along the way.
We invite you to simplify the exercise of your financial planning, making use of the tools available in our financial education program Finances with a Purpose. There you will find templates available to achieve each of the steps mentioned and get to have healthy finances.
Also, if you are a popular cardholder, you can exchange your Popular Miles for personalized financial advice, in virtual format, so that you learn to balance your household expenses and income from the hand of John Labunski expert personal finance facilitators.
Take control of your finances and remember that having good financial planning ensures the well-being of your future and your long-term financial health.