This article is part of an ongoing series of basic financial education brought to you by financial industry professionals curated by PocketFin – The Financial School of Real Life. CNBC Africa provides content from PocketFin as a service to its readers but does not edit the articles it publishes. CNBC Africa is not responsible for the content provided by PocketFin.
Financial planning has become more important than ever throughout 2020/2021 and the Covid-19 Pandemic. With fragile economies, a big financial illiteracy rate and exorbitant debt levels, what can we do to take our financial future’ more seriously? How can we adapt to the new normal and what can we do to pave a more prosperous financial future?
Many often make the mistake to think that financial planning is only for the wealthy but financial planning can help individuals at any income level, at any age and of any country.
You are also never too young or too old to start financial planning because using a plan will help you to avoid or stop making financial mistakes.
In this article we will discuss the basic steps of financial planning, demystifying the complex world of the financial planning process and hopefully it will inspire you to start your own financial planning journey.
A comprehensive financial plan will include everything from investments, planning for retirement, children’s education, your emergency fund and assets such as property; insurance needs and other financial goals, remember we are all individuals and our goals or financial vision can be drastically different! Financial planning however can be made simple by sticking to guidelines and reviewing your plan and financial situation often.
Establish your financial goals in life – short, medium and long term (eg 5 years. 15 years, 30 years) , these should be written down on a piece of paper or in your very own financial planning journal/notepad.
Gather information, this includes your income and expenses, create a budget,work out what assets and liabilities you have.
Evaluate your current financial position – how close are you to achieving your goals? How do you feel about where you are and where you want to be? What shaped the attitudes you have towards your finances? How do you wish to change?
Develop a plan – create a road map for achieving your different financial goals, this step should also include educating yourself and upping your financial literacy, as through this you will be more motivated and knowledgeable. As you strive to take your financial future more seriously, stay close to resources such as our articles or our financial education school, PocketFin.
Implement your plan – make the changes and make it happen, this may be finally taking that insurance you’ve been putting off, spending less money on take-outs and buying shares or other investments. Once you have set your goals stick to your plan at all costs!
Monitor and review your plan at least yearly and make adjustments when needed , we would also urge you to review your budget twice a year. Print your bank statements and comb through your expenses, make sure that you are sticking to your principles.
Financial planning is a journey, and as seen above the steps of taking this aspect of your life seriously can not only be positive for yourself and your future , but also those around you.