Everyone Needs a Personal Financial Plan
Personal finance is simply the money that makes your life what it is — how much you earn and how much you save; where you live; what kind of car you drive; how much you spend on clothes or vacations; how much you accumulate in retirement accounts or invest in stocks, bonds, or mutual funds; how you afford college for your children; and whether you prosper or merely limp along.
Developing a personal financial plan means taking the reins, educating yourself, becoming a savvier money handler, and assuming full responsibility for your financial future. Whether it means managing a meager income and budgeting to afford necessities or cleverly investing inherited or expendable income to cement a lucrative lifestyle, personal finance is both very personal and very important to your present and future welfare.
Fact
According to David Bach, author of Smart Women Finish Rich, 90 percent of women will have sole responsibility for their finances at some point. Three out of four people living in poverty are women, and seven out of 10 women will live in poverty at some point in their lives.
It's really pretty simple: Without a financial plan, you probably won't be going anywhere worth going financially. Dreams and goals create a road map that will eventually get you where you want to go. Whether you like it or not, even the small decisions and choices you make today to forego impulsivity and better your finances will have a major impact on the quality of your life in the future.
Peter Sander, author of The 250 Personal Finance Questions Everyone Should Ask, pinpoints three characteristics that create financial success:awareness, commitment, and control. In other words, you need to make yourself truly aware of your personal financial reality. Once you've written it down in black and white — income, expenses, assets, and liabilities — you need to create and commit to a plan for bolstering your income and assets and effectively managing your expenses and liabilities. You need to make conscious decisions to stay on course and consistently monitor your progress.
A vital step to gaining control of your personal finances is creating meaningful, achievable, and time-based financial goals. Once you've established your financial priorities, you need to create a comprehensive game plan for achieving them within your time frame. The hardest part, of course, is sticking to the strictures required to realize long-term goals — keeping your eye on a dream that seems far away and that may look that way for a long time.
