Dealing with your personal finances can give you a big headache. Often, very few people do the exercise of assessing their financial situation. Here are 3 major reasons to love personal financial planning.
Know that financial planning is not that complicated.
Financial advisers like to pretend otherwise.
You just need to know where to start and understand where you are in your phase of life.
To help you, I consider that there are 3 “economic” phases in your lives:
- education;
- the adult phase;
- your retirement.
And these 3 steps are the major reasons to love personal financial planning.
1-Your education
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The number one reason to love personal financial planning is the stage of your education.
This phase is quite simple for you to determine.
You mainly do 2 things in this phase of your life:
- you study;
- and you spend!
Indeed, you earn very little money during this period and expenses strongly dominate.
It’s true! You have the books and your tuition, your beer budget, your accommodation, the beer, your various fixed and variable costs, not to mention the beer 🙂 .
Not kidding, this is still a critical time for establishing your finances and your plan to achieve financial freedom.
You have no income and lots of expenses.
On the other hand, it is a crucial step since it is here that you will prepare yourself to earn an income for the future years.
See this moment as an advantage. It’s an investment you make in yourself. And as an investor, I can tell you that there is no better way to use your money than to invest in yourself!
This period of education will have favorable impacts on your income until the end of your days.
2- Work is one of the major reasons to love personal financial planning
The second phase of your life is the “adult” period.
This is, in my opinion, the most wonderful time when it comes to your personal finances.
You are at the heart of your growth plan to achieve financial freedom and independence.
Your main job will be to accumulate assets thanks to your income, but also with your new financial knowledge which will be acquired through this time.
This phase of your life will obviously require you to take care of your business.
Your game plan should go like this:
- repay your debts,
- save,
- invest.
Thus, you will be able to enrich yourself.
You can be accompanied by an advisor or a financial health coach to establish the actions to be put in place to achieve this .
Why not do it by yourself if you are motivated?
Unfortunately, many people do not plan anything. Despite high incomes, the accumulation of wealth to generate value remains difficult and almost impossible for them.
Obviously consumer incentives and the fact of not being fiscally efficient are important factors in not favoring the accumulation of your capital.
3-Your retirement
The final phase that may make you love personal financial planning is retirement.
It is the culmination of your whole working life.
During this stage, you will see the positive impact of taking care of your personal finances .
If you don’t have a plan for your retirement, you’re done.
You will have lots of expenses and little income so you can live the life of your dreams.
Don’t plan your retirement solely with state pension income. These will not be enough for you.
Government retirement pensions aim to replace approximately 25% of your income as a worker. So where is the remaining 75% to live a retirement without financial stress?
As you see, these 3 stages of your life have different purposes.
However, they definitely have one thing in common:
- there’s always a good reason to take care of your personal finances. You have to know where you are to know where you are going 🙂 .
Unfortunately, those who are not going to take an interest in managing their wealth risk losing control of their personal finances.
This is precisely the purpose of doing this whole exercise.
Master your dominant financial variables according to your phase of life.
Once your variables are known, setting up your action plan will be easy.
