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Create a Financial Plan for the Next 5 Years
Financial planning is usually a sure way to put you on the track to success. For those that have a solid financial investment plan you can save more and earn more than just winging it. If you have specific goals and dreams that you would like to accomplish in the next five years, one of the best ways to do so is with a five year financial plan.
If you are young and just out of college, you may not be thinking too much about your retirement, while extremely important, it does seem very, very far away. However, you probably want to buy a home, start a family or just save up enough money to travel or buy something big. Having a five year financial plan can be the key to this success.
Starting a five year financial plan is quite simple. First off, create specific goals and make sure these goals are attainable. For instance, becoming a millionaire might be wishful thinking, but it is usually very difficult to attain in a span of five years. However, a goal of saving $50K or $100K might be more realistic. Other goals may be to save enough money to open up a shop, travel for a year overseas or buy a boat.
Once you have a specific goal, now comes the research and planning stage. Think about how you intend to amass specific amounts of money. Ways to amass money includes saving and investing. There are many ways to both save and invest, some include 401K, certificate of deposit, trading stocks, taking on a second job or starting a small business, etc. Whatever you decide figure out how these choices will help you amass a specific amount of money. Since everyone’s financial situation differs, you may even want to speak with a financial planner.
Financial planners are not only for the wealthy. Even if you have $0 in the bank, a financial planner can enlighten you on many strategies for both saving money and investing money. Five years is usually a long enough time period to grow your savings and investments significantly and a short enough period that you can maintain your focus. Whether you are 22 or 62, a five year financial plan can be extremely beneficial.
If you are experiencing hard times and your credit score has taken a plunge, one of the ways that you can get back on track, lift yourself out of debt and improve your bad credit rating is by budgeting and careful financial planning.
Budgeting is an excellent strategy for controlling your credit card spending, as well as paying off credit card and loan debt. When you create a budget, you take into account all the money that comes in such as your income from your job, investments that you have and payments that you might receive from the government or other organizations. In addition to know what you are taking in each month or year in income, it is also important to figure out what your expenses are. Most people are unaware of all the things they spend money on, many of which can add up to several hundred dollars per year. Once you have a list of expenses and a list of income together, you can analyze both to make sure you are not living beyond your means.
If your income is only $3,000 per month and you are spending $4,500 each month, in a few short months you will be deep in debt. By using a budget to control your spending, you should find it easier to save money and pay off your debt in a quick and efficient manner.
Financial planning is also another good way to pay off debt and improve your credit score. One of the ways that financial planning can help you overcome large amounts of debt is to counter your debt with resources and financial tools that make it easier to climb out of debt quickly. For instance consolidation loans are a way that financial planning can pay off. A consolidation loan is a loan used to pay off many different credit cards with only one loan. This way, instead of having several credit cards, each with a different interest rate and minimum balance, you have one low interest loan with one set monthly payment. Many times using this strategy can shave off several hundred dollars a month of debt making this financial planning technique extremely resourceful.
Financial planning is also a great tool to use when figuring out how best to reduce debt and improve your credit score. For instance, financial planning can be as easy as dropping high interest cards and transferring their balances to lower interest cards or coming up with a long term strategy to remove certain debt first and then focus on other lower cost debt afterwards.
If you want to improve your credit score and climb out of debt, look to budgeting and financial planning as one of the most promising and effective tools.