Even if you have very identical plan tailored to the investment, in fact there are priorities that apply to all people in making the financial planning. What is it?
When making financial planning, we must start from the highest priority. Is it for investment? Of course not!
First, we must check and pay off our consumptive debt. Let us check out our list of debts, is there any credit card debt and unsecured credit debt? If there is, then pay off this debt with the money you have in savings.
If you like to pay credit card bills with a fixed amount, such as $500 per month, eliminate the habit. We must always pay off credit card usage, regardless of the number of bills.
Second, cash flow should be positive. This applies to monthly cash flow and annual cash flow. Household expenditure, utility bills, monthly expenditure, as well as personal shopping, must be paid from the monthly salary. While the holiday cost, land and building tax and other expenses should be paid from your bonus fund or holiday allowance.
Well, how to make the cash flow always in positive trend? It is easy! Do not let your expenditure bigger than your income!
Third, you must have an emergency fund. After our cash flow is positive, then the third priority is to have an emergency fund. When faced with unexpected needs or conditions, emergency fund will contribute a lot.
Well, to save an emergency fund, the product we choose must be a highly liquid product and low risk. Like it or not, the bank saving account is the best place to store your emergency funds. If the ideal target has been reached, you can store the excess money in money market mutual funds, bonds, or even gold investment.
Buying insurance products
Fourth, determine financial goals. The main essence of a financial plan is to have financial goals. The dreams are not financial goals. Investment is also not a financial goal, because the investment is one of strategy to achieve financial goals.
A goal must have a target cost, duration, and strategies to achieve. If not, that's just a work of literature.
Fifth, implement strategies in accordance with financial goals. Well, this part is a challenge for many people who trying to make their own financial plan. But it is not impossible. In fact, the product must be carefully selected in accordance with your risk profile, financial resources, time frame and the desired return target.
Before choosing a product, you must fill out the risk profile questionnaire. It is to find out whether you are a conservative (true saver), moderate (half saver, half investor), or an aggressive (high return seeker).
Sixth, purchase the insurance products tailored to your needs. There are many people have started to buy insurance product. But, there are very few people who know exactly what insurance they bought. Insurance needs also should be a priority because we may not have the ability to pay premiums ideally. The order of compulsory insurance is life insurance, health insurance and general insurance.
Insurance is not an investment! You must fulfill the income-protection needs with insurance, and meet the need to achieve targeted balance with investment.
Every person must be able to have financial planning. By using the right priority, life is more beautiful and prosperous as desired would be more quickly realized.
But the plan is not enough. We need real action. Care about yourself and your family by providing the best for life. Live a Beautiful Life!
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