Financial planning is not something that comes to us all naturally. For many of us, living each day as it comes is more than enough. But what if we were to tell you that planning your finances could make you wealthier and healthier?
Fail to prepare and you should almost certainly prepare to fail, particularly where finances are concerned. Because knowing exactly what you hope to achieve is the only way you’re ever going to achieve it and without that understanding, finding a place of financial security can be almost impossible.
Planning your finances rather than just letting your expenses and profits pile up around you has the following benefits:-
Goal setting – Goals are what give us purpose and direction. We need something to reach for and it could be anything from a specific financial target to a summer holiday. It might even be something less tangible. It doesn’t really matter. What matters is that it’s tailored to you and is realistic.
Focus – Whether you’re a small company, a sole trader or a company with dozens of employees, a good financial plan will give you that extra level of focus. Because having a clear plan outlined means everyone around you is working towards the same goal, whether that’s your employees or your family.
Commitment – The modern world is ridden with ambiguity and distractions. For example, you might have a friend asking you to join them for drinks at the weekend, which will inevitably also lead to dinner. If this happens every weekend the costs start to add up. With a financial plan, however, you’ll be committed to sticking to your guns and holding fire on certain expenses when you have a clear target in sight.
Emotional and mental health – If there’s a good plan in place then you’ll not only be more optimistic about your future but you’ll have less to worry about too. Financial troubles are comfortably the number one cause of stress and anxiety in the modern world. So, it makes sense to cut that worry free by creating a solid plan. You might even find it has a knock-on effect on other aspects of your life.
Setting standards – As part of your financial plan, you will naturally include milestones to define your progress. These act as necessary standards that can be used to ascertain your financial stability. These can be standards such as refusing to get into debt through lending, setting aside “rainy day” funds and general measuring sticks you can measure yourself and/or your business against.
Above all else, those who have made financial plans are more likely to be financially successful. Marketing research has found that those with a strong and clear financial plan are almost twice as likely to succeed as those that forego plans entirely.
So, what’s stopping you from starting one today?
Article by Born Realist