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How to create a solid financial plan

Updated on December 12, 2012

To create a personal financial plan you must need to understand your current expenses and future requirements. As you know, knowledge of personal finance is very essential for every individual to have a financially secure life. But, if you will create a financial plan, it will become easier for you to fulfill your future requirements. Financial plan helps you to achieve your dreams easily by investing money systematically.

Create a Financial Plan
Create a Financial Plan

Creating a solid Financial Plan

Firstly, you must analyze your current needs and monthly expenses that are extremely necessary for a living. After analyzing this, you must figure out any upcoming expenses, like admission fees of child for higher studies. When you have figured out all the major expenses that are required to be done, you need to know your desires; may be to buy a new house, a car or may be a holiday trip.

Now to create a financial plan, write down all these expenses and desires along with the probable time frame. After listing all the expenses, you will have a better idea that which expense will have to be done after how many years and how much money you will be requiring by that time. Now decide the priorities of each expense and check out how much money you can save each month to fulfill your desires. Before putting aside any money for your desires, you must add Retirement in your future requirements list.

According to the set priorities, put aside some money and invest it in a secured investment instrument or open a recurring deposit till the required time. In the same way, do it for all your necessary requirements. While putting aside the money, calculate in terms of percentage of the total money, as your earnings will not be constant and probably will increase with time. So, setting aside in percentage will be easy for you to calculate and increase your portfolio value. When it comes to invest for your desires, you may invest some part of money in a relatively risky investment instruments like Mutual Funds or Stock Market to get better returns.

If you still be left with enough money, add it to your retirement portfolio by investing it in either retirement fund or you may also invest in some Blue Chip stocks.

Step by step summary to create a solid personal financial plan

  • Analyze current expenses
  • Figure out upcoming expenses
  • Add Retirement Planning in to your list
  • Write down your desires
  • Set Priorities
  • Put aside money accordingly in terms of percentage.
  • Invest in secured instruments for needs
  • Invest in secured or less risky instruments for desires
  • More Money: Increase your Retirement Portfolio
  • Invest in Retirement Portfolio or buy Blue Chip stocks

This is the simplest way to create a solid financial plan to meet all your expenses easily. Initially, it may look a bit complicated or tedious, but if you follow it then I’m sure you will have a financially secure life and all your dreams will also be fulfilled.

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    • sameerk profile image

      sameerk 

      7 years ago from India

      nice info , keep coming

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