The Practical Guide to Powerful Personal Financial Planning

Did you know that personal financial planning is touted by professionals as the most important tool to achieve your goals? Yeah.

So in this guide we'll teach you how to create powerful planning to help you realize your biggest dreams - I believe, it's possible!

Without planning , many entrepreneurs start a business without knowing their target audiences, suppliers, competitors, fixed and variable costs and end up closing the doors before the business completes two years.

When we look at personal finances , caring about money and managing it is left behind by many Brazilians who prefer to simply make decisions from "mental accounting."

Concept: What is personal financial planning?

Personal financial planning is nothing more than defining a strategy for decision making from the use of control tools, using an intelligence capable of facilitating the achievement of goals taking into account the profile and personal characteristics of each person.

How to do personal financial planning?

The financial planning should be an ongoing process and should include the identification and balance of what comes in and what comes out of money, reckoning, the choice of investments and the renegotiation of debts when necessary.

Fortunately, designing financial planning is simpler than many people imagine.

Why Personal Financial Planning Is Critical?

Unfortunately, in Brazil we have not developed the culture of valuing financial education.

The families do not talk much about money (the same matter only when there is a financial problem) and schools also do not find weight projects developed by professional guideposts to address the issue "money" properly.

Because of this reality, of the economy and difficulties of a developing country, financial planning becomes fundamental in all families , which in some cases even need professional help to develop it.

5 Common Mistakes (and How to Avoid Them) of Financial Planning

Good financial planning requires people to maintain a certain discipline . It is critical to realize that more than adopting a control tool , what will make the difference between success and failure lies in one's personal commitment to putting financial planning into practice .

Changing the routine, especially in the beginning, and adopting new financial practices can be tricky. You must employ a good deal of disposition and organization, including dedicating time and energy.

Some errors are more present in the routine of those who use financial planning , this is normal and is part of learning. Let's now know a little more about the top 5 mistakes:

Mistake 1: Believing that only those who have lots of money need to control expenses

This is undoubtedly one of the most common mistakes. We often hear from many people that the paycheck itself is so low that it is not even possible to develop good financial planning .

Unfortunately, the truth is not quite this. It is more than clear that what escapes from the control of people is the small expenses, which repeated in great constancy end up eroding the budget .

The idea of financial control and planning is not purely to prohibit spending, but rather to identify spending so that people's budget achieves the dream balance.

Mistake 2: Do not prioritize the need to invest to realize the dreams

People do not view investments with the necessary priority. It is common to know people who spend their whole lives complaining that there is never enough (and never will) resources to invest.

Investments should be the family's first "expense." So we can not wait to see what's left. The rule should be: set a percentage of the revenues for your investments and then adjust your consumption pattern.

Mistake 3: Not understanding the difference between investments and emergency reserve

A good financial project takes into account the need to maintain a reserve for emergencies.

The financial reserve has a specific objective, even so it should not stay with  investments .

A good emergency reserve should be enough to maintain a family's standard of living for at least 6 months.

Mistake 4: Do not realize that banks do not always offer what you need

People's relationship with banks is very trust-based. Knowing that there are professionals who take care of our money is important, it happens that few people stopped to reflect that banks do not always offer people the best products .

The bank managers have aggressive goals and are very well paid when they can reach them, but unfortunately, the products they offer are much more profitable for banks than for their account holders.

In fact, banks do not always offer the products that customers really need, but those that are in the interest of the institution.

Mistake 5: Do not value the help of professionals when making good planning

If one of the errors of the people is to overvalue the role of the bank manager, another mistake that is very committed and that damages the results of personal financial planning, is the low appreciation of the professionals who work with this subject.

The rule is simple: good professionals are expensive, but having access to a job well done in financial planning can mean a huge cost savings over the years.

A good professional can also indicate better investments, which will make all the difference in the course of time. So make sure to value the good professionals who work with financial planning and consulting .

How to set up personal financial planning?

To start putting together a personal financial planning , the first step should be to gather as much information as possible about your financial reality .

Separate current account and investment statements , purchase receipts, proof of income, and other materials that help you in the first analysis of your financial situation .

It is important to raise the equity you own and also the debts to know the real estate situation - the goal is to prepare personal financial planning in an appropriate and, above all, realistic.

An important issue that needs to be taken care of by those who have debts is to keep an eye on interest rates . In many cases, the best way out can be to renegotiate debts .

Those who are already investing must observe the profitability of the products they own and if the risk they are exposed to is in line with their investor profile. The revaluation of the investment portfolio is also part of the personal financial planning process .

Organizing Your Personal Accounts

Organizing accounts in financial planning

Organization is paramount for anyone who wants to develop financial control and is among the basic needs for good personal financial planning .

There are several ways to organize personal accounts , thus creating a system of financial control .

A simple personal financial control is often enough to ensure optimal results, and it can be done even by using a booklet where revenues and expenses are entered, creating a home financial control.

Some people prefer to use tools to organize themselves. A financial control worksheet , using Excel, is an alternative that works very well.

Create a monthly control worksheet using Excel

Make the financial control using Excel is relatively simple, you do not need advanced knowledge to use the tool.

There are many spreadsheet templates , some of which include graphs that make it easier to see the evolution of spending and revenue .

You can create your own spreadsheet  using the various examples spread over the internet. Just remember that it is critical in developing the financial planning and consequently your spreadsheet that the expenses and revenues are very well detailed and categorized.

Avoid items in your worksheet that are named "Other" and "Miscellaneous," because for the details to work the details are critical. It's no use spending and not knowing where the money went, right?

Also remember that the credit card is a form of payment and not a group of expenses, so when making the payment of the supermarket with it, the amount of that expense should be allocated to the expenses of "supermarket" and not an expense " credit card".

Learning to deal with money

Talking about money has always been a challenge for most families. Therefore, when we approach money from the point of view of financial planning (and not only when it is synonymous with problem), we walk to train people who will appreciate not the money itself, but its importance for building freedom and quality of life.

Posted on June 27, 2018 at 06:44 PM