November 15, 2019 Last updated November 14th, 2019 75 Reads share

A Step-By-Step Guide To Effective Personal Finance Planning

Guide To Effective Personal Financial PlanningImage Credit:

Tips to Plan for your finance

Let’s say you are going on a road trip to Edinburgh from London, and you want to take the shortest route possible. You will first plan about the route you will be taking, estimate the time to reach the destination from every route possible, estimate the amount of fuel that will be required and decide where to stop along the way and why? Just like navigating the best route to your trip, personal finance management requires thorough planning early on, before trying to reach out for your set targets and financial goals.

Without thorough planning for your personal finances, you will most likely be unable to achieve your desired financial goals and objectives.

Personal goals and objectives are influenced by various factors, for instance, one person may want to buy expensive cars in the future and travel, whilst others may simply want to save enough money for retirement, so they can enjoy the rest of their life financially care-free.

What is personal finance all about?

Personal finance is the management of your money which includes saving and investing for the future. Your personal finance management includes budgeting, insurance, banking, mortgages, retirement planning, living costs and financial planning to meet your personal goals and objectives. Personal finance also refers to the industry that advises individuals about potential financial and investment opportunities

Personal finance encompasses all of the planning required to meet your personal financial goals, whether it’s about planning for retirement, having enough cash to meet your short-term financial goals or saving for a residence or property. Your personal finance management is highly dependent upon your income, expenses, living standards and your personal wishes, interests, and goals. Efficient personal finance management requires one to devise a financial plan and spend their money accordingly to the plan, whilst also keeping all of the financial constraints in mind. However, to ensure you receive the maximum out of your personal finance management, you should have enough financial knowledge and must be able to distinguish between what is a good or bad financial plan. Make sure you speak to an accountant about your pension plan, savings, and tax in order to get a good start.

Effective personal financing planning- step by step guide

Everyone has their own dreams to pursue, their own financial goals to meet, so every individual has to plan differently for their finances. You must always listen to what experts have to say, as sound financial advice and correct investment strategies can make your life goals and dreams achievable in the future. However, there are a set of rules and procedures that every individual must follow if they want to achieve the best in their life.

Clear House Accountants have listed down a six-step guide that will help you build strong foundations for a better and secure financial future.

finance planning

1. Find a professional financial advisor

It’s very important to have a professional financial advisor on board as part of the financial planning process. A highly experienced financial advisor will provide you with the expertise required to create an effective personal plan. They have the basic know-how about how individuals should manage their expenses based on their living style and can help design a plan that encompasses major aspects of personal financial planning. However, before choosing a financial advisor you must clearly figure out the fee structure, the scope of their financial services, the expected time frame for the full provision of services and how frequently will the advisor review your financial plan. If you do not have a financial advisor it would be wise to ask your accountant or accounting firm to refer someone within their network, our service partner has been built specifically to add value to our clients, speak to us to learn more.

2. Establish your personal long term financial goals

Before you start, you need to identify your objectives based on which you should set your goals and targets. Rank your goals and targets based on its priority and level of importance, once you have set your goals, devise a timeframe in which you wish to achieve these goals. Assess your current financial situation by gathering all the relevant financial data relating to your income and expenditure and check whether your goals are realistic to achieve or not. Your accountant or tax accountant should be helping you during this process.

3. Conduct an analysis of your financial position

After successfully identifying and establishing your goals and objectives, you should brainstorm about the ways you can achieve your long-term or short-term financial targets, whilst considering every possible financial constraint. Your financial advisor can provide you with the necessary recommendations after carefully analyzing your financial position to develop an effective strategy for you to meet your short and long term financial goals.

4. Design a plan and discuss it with your advisor

This is the most important step, as you will be meeting your financial advisor to discuss the recommendations suggested by them. After considering their analysis and recommendations, you will need to design a plan and discuss its prospects with the advisor. Ensure that whilst you are designing the plan, you should consider every recommendation suggested by your advisor and let your advisor review your plan on every step. Once you are done with the plan, you should feel motivated and confident in your ability to achieve the desired financial targets.

They will be helping with:

  • Retirement Planning
  • Estate Planning
  • Long Term Care Planning
  • Inheritance
  • Tax Planning
  • Investments
  • Debt Management

5. Implementation of your plan

After developing your personal financing plan with an expert financial advisor on board, it is time to execute it. The successful execution of your financial plan will take a lot of time, so it’s advisable for you to stay patient and disciplined to accomplish the desired goals and objectives. Make sure you include your accountants or tax accountant within these conversations.

6. Review your plan regularly

Implementing a financial plan is an ongoing process and requires constant assessment and review from experts, to ensure that the plan is on track with your financial goals. Let your financial advisor conduct reviews on your plan on a regular basis and examine your financial progress. It’s your duty to consider and implement any adjustments or recommendations suggested by your advisor.

Thao Le

Thao Le

Thao Le is a Senior Accounting Manager at Clear House Accountants. Having worked and grown in the industry for a number of years she is now responsible for a team of accountants, tax planners and bookkeepers, working with them to help clients from a variety of industries, grow, save money and plan for the future. Thao holds a Bachelor and Masters degree in Accounting and Finance and is currently working towards her ACCA, she is also a Xero and Quickbooks Certified Advisor. Thao believes her expertise lies in high-level tax planning, management accounting and strategic business planning based on financial performance and business analytics. Her experience, expertise and knowledge make her an exceptional contributor at clear house towards various articles and research content.

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