Financial planning can be done in a variety of creative ways. Creating a financial road map is one method to help anyone visualize their aspirations and find new ways to prosper.
Defining Financial Roadmaps
Financial road maps are a unique way to visualize the route to reaching your financial goals. By creating a roadmap, you can keep sight of your priorities and stay on track with your short and long-term objectives.
When you can see the entire picture in front of you, it gives you a new and wider perspective. This can help you avoid patterns of behavior that set you back and even show you new roads to financial success.
First Stop: Determine Your Financial Objectives
The first step in any journey is figuring out the final destination. Consider your goals for this year, and even the next 10, 20, and 30+ years. Write down what assets you currently have, as well as any debts you need to pay off.
Also, take note of your retirement plan, your savings, and any investments you’ve made or plan to make.
Second Stop: Create a Budget
What are your typical spending and earnings and how might that change over time? Write down a detailed list of what money comes in and out each month.
One method that can help you better track your budget going forward is to pay with checks whenever possible. This creates a record of spending as you go.
You will be able to determine any blind spots that are draining your funds or any areas where you can reallocate money.
Third Stop: Pay Off Debt
One of the biggest steps to financial freedom is paying off debt. Once your necessities have been deducted from your income, make it a top priority to eliminate existing student loans, mortgages, or other debts as soon as possible.
While it may take time, the financial road map can motivate you by showing you a clearer picture of how and when your debts will be paid off.
Fourth Stop: Build Savings
Now that you’ve got the main bases covered, you can determine how much money to save. You can create short-term savings, long-term savings, emergency fund, retirement fund, or mix and match depending on your needs. The most important part is that you stick to the amount you’ve determined.
Once you can visualize and mark your goals on your financial road map, you can determine where the next step is likely to lead. For example, you will get a better idea of when you can begin to retire and live off your savings in the long term, or even when you can go on a new vacation in the short term.
Final Stop: Achieve Your Goals
After you’ve charted your way to debt-free living and you’ve saved a comfortable amount to live off and for emergencies, you’ve made it to the destination! Now you can begin to plan how you’d like the remaining years to look.
You can also decide if you’d like to invest money to further your financial goals. When the necessities are finally covered, determine your level of risk and begin to see how far you can make the remainder of your money work for you!