Financial Plan

Seven Easy Steps

Step 1 .... A Plan For Your Buget And Taxes

Composing a budget in just 4 steps:
1. Establishing your net worth- Net Worth= Assets-Liabilities
2. Establishing you income- a persons income relays on the decisions he/she makes about education and career choice.
3. Identifying your expenses- When constructing your budget, you will need to estimate how much money you are spending every month. To determine how much you can save.
4. Considering the impact of taxes- As your income accumulates you will want to begin to admit tax planning in your financial plan.

Step 2 ... A Plan For Managing Your Liquidity

Your level of liquidity attributes to how much available cash on hand for immediate wants and needs. Managing you liquidity consist of money management and credit management.
Money Management: Involves making decisions about how much cash or liquid assets to keep in reserve and how much to invest in liquid assets.
Credit Management: Involves making decisions about getting credit and using credit.

Step 3 ... A Plan For Your Financing

Making major purchases such as paying for an education or buying a car, require borrowing money for long periods of time. There are many variables that will determine how much money you can borrow and the payment terms.

Payment Terms: Include the specific information about the interest rate the lender will charge you and the time period for paying them back for the loan.

Step 4... A Plan For Managing Your Risk

As your amount of assets increase, you will need to start to form a plan to protect them. If one of your assets gets damaged or stolen, you will suffer the loss of that asset. Unless you have insurance. Without insurance you assume all the risk.

Risk: The possibility of a financial loss.

Step 5...A Plan For Your Investing

A plan for your investing includes liquidity funds, and investment funds. Liquidity funds are to pay for day-to-day expenses and unexpected emergencies. Stocks, bonds, mutual funds, and real estate are common examples of investments.

Step 6...A Plan For Your Retirement

Maybe in some cases its difficult to wonder about retirement plans, but the earlier you start the more prepared. People who retire early generally have saved up and planned for retirement while they were young.

Step 7...A Plan For Communicationg and Keeping Records

Family is important when it comes to your finanical plan. When making a financial decisions and transmitting that decision is keeping good records. You will need these records when you adjust your net worth.