A bird’s eye-view of your financial plan

Most people don’t enjoy financial planning. It’s a practice filled with stigmas of confusing concepts, complicated products, and expensive choices. But the fact is that none of us can live without it costing us money. Even if we simply want to go for a walk, we need to buy the time to do that.

We need to earn enough money during our working hours to buy the freedom to choose what we want to do in our downtime. And to do this, we need to have a plan (however basic it might be) in place.

You don’t need to know everything, but you need to know some things. Here are some ideas from the team at 22seven to help us hold a bird’s eye-view of our financial plan.

  1. What are my financial goals? 

Save money, have enough money to live comfortably, make work optional… 

These are reasonable goals if you’re taking the broad-brush-stroke approach. Still, it’s vital to have smaller, more tangible goals along the way that will give you a sense of accomplishment and motivate you to continue on your personal financial journey. 

Your smaller goals can’t be vague – they have to be clear and concise so that you know exactly what you have to do to achieve them. For example, your goal might be: ‘I want to save 10% of my income each month’ or ‘I want to increase my net worth by 5% over the next five years.’ 

  1. How much debt do I have? 

Debt doesn’t have to be the millstone around your neck. If you know how much you owe and what the interest on the debt is, you can make a plan to reduce it and ultimately get rid of it.

Make a list of every loan and how much you need to repay each month. If you want to speed up your repayments, allocate extra money to the accounts you wish to pay off quicker – maybe the account you owe the most on or the one with the highest interest rate. From there, you just have to stick to your plan.

It’s not impossible – you can do it! 

  1. What is my net worth? 

‘Net worth’ sounds like a fancy term, but it’s just everything you own (your assets) minus everything you owe (your liabilities). An increasing net worth indicates that your assets grow faster than your debts. That’s what you want! 

Net worth is a valuable snapshot of your entire financial situation, so it’s worth checking every now and then.

  1. Am I covered when things go wrong?

What if something happens and you can no longer work and earn an income? As depressing as it is, you need to plan for the worst. Some examples are disability cover, dread disease cover and income protection cover. 

This bird’s-eye view is aimed to help you maintain a high-level grasp on your financial plan. Still, each point above has many deeper conversations that help us craft and leverage your financial plan to suit your personal needs and ever-changing circumstances. If you need specific help before our next meeting, please feel free to reach out and let’s keep you in the best position possible to thrive in life!