Managing personal finances can be one of the most stress-inducing experiences, especially when your finances are not in good standing. Proper money management is a necessity, but for some reason it’s easy to treat it like a distant priority. That’s until you go to make a purchase and the cashier says; “Sorry, it seems you have insufficient funds?” or, when your child asks for the new toy they just saw on the television screen and you try to convince them that “Make-Believe” is just as good. C’mon now, you know it’s better to experience the real thing. 

So, how can we resolve these money problems and avoid having to go through these annoying experiences? In this article you will learn 3 essential components to developing a solid financial plan.

1. Know Your Financial Situation 

Before you could get to where you want to go, you have to know where you are. Developing a solid financial plan requires that you honestly assess yourself to know where you are financially. To do this, you need a clear budget showcasing your current income, expenses, savings, and obligations (debt). When creating your budget, don’t attempt to be aspirational or impressive to yourself on paper. If you only make $2,500/month, don’t write $3,000 because it looks better. Write down the real numbers as they are in the moment. You should also meticulously write down every expense, even the ones that you believe are insignificant.

2. Set Your Financial Destination

Once you know where you are, you could begin identifying where you’re going (your desired destination). This is about setting financial goals.  Having clear goals is essential to guiding you on your path toward securing your financial future. I would suggest that you have goals in the following areas.

  • Savings Goals 
  • Debt Reduction Goals
  • Credit Score Goals
  • Retirement Goals
  • Investment Goals
  • Charitable Giving Goals
  • Lifestyle Goals
3. Begin Financial Implementation

A financial goal without an action plan is only a financial wish. Spoiler Alert; you will not solve your financial problems with wishes. It requires action! It’s important that you start where you are with what you have. You don’t need to wait until you get the raise from the job or until you receive your tax refund to begin saving and getting your financial house in order. Start right now. Here are a few things you could do immediately:

  • Save a set percentage of your income monthly
  • Identify expenses that you could reduce (i.e. Daily Starbucks Coffee)
  • Stop applying for store credit cards to get 15% off the purchase of the day.
  • Take inventory of every dollar that is going in and out of your accounts.

In the end…

The principles of financial management are simple; earn more than you spend, pay your bills and obligations, save and invest, and have multiple streams of income. The difficulty most people face, is being disciplined enough to stop buying what you want and then begging for what you need.  Remaining disciplined isn’t a money problem; it’s a personal growth challenge that many struggle with. Developing a solid financial plan is the first step in securing your financial future. 

For additional support, check out AIMHigh’s Ambassadors Academy, a comprehensive eLearning platform to help you live your best life now.

Legal Disclosure: The information provided is intended for educational purposes only and does not constitute investment, legal, tax or financial advice or advisory services. You should always contact a registered financial professional before acting on this or any advice.