Have You Created Your 2022 Financial Plan? Here are 5 Steps To Creating One

Making financial plans is one of the most underrated financial practices. However, it will ensure you meet your many financial goals and dreams. This is because a good financial plan serves as a roadmap for your finances. And you know, finance is a very important aspect of you as an individual. 

Your goal may be to make your first million within the year or your goal may be to move into tens of millions before the year ends. At whatever level you are and whatever financial target you have set for yourself, there is a likelihood you may or may not reach the target. The likelihood of you not reaching your financial target is higher unless you do one thing – design your Financial Plan. In this post, I will be sharing with you six steps you can follow in creating a financial plan for yourself.

Start With Reviewing Your 2021 Financial Progress

You may not fully understand where you are going until you understand where you are coming from. Before you set yourself to setting your financial plan for the year, you need to take out time to review your 2021 financial progress. Peradventure, you already set your 2022 goals but didn’t do this, you can still go back and get the year 2021 review.

Set Goals For The Year If You Have Not

A goal simply refers to the desired result, target or outcome you have defined for yourself to achieve. We all need goals because your goal is what will drive you and give you something to work towards.

When it comes to your finance, you need to have a set of defined financial goals. In goalsetting, it is advised that when setting your goal, you ensure your goal fulfil the SMART test. That is, your goal should be Specific, Measurable, Attainable, Realistic, and Time-bound.

So, while “I want to end the year with an account balance of 5 million Naira” is a worthy goal, “I want to be richer this year” isn’t.

Define Your Available Sources Of Income And The Expected Income

We all know money does not grow on trees. Money comes either as reward for labour or profit from service. In setting your financial plan for the year, you need to also define the various sources already available to you. Are you currently employed, how much is your salary and other allowances that may come within the year. If you are not employed on a job and you run your own business, then you need to work with your previous business records. This is where the review in step one comes in.

Define Your Major Expenses

What are the various things that you will be spending money on throughout the year? House rent, food, clothing, etc. You need to define these expenses. Doing this will be a lot easier when you can tell yourself where you spent money on previous years. In defining these expenses, designate them into compulsory, major, and minor. The compulsory expenses are those which you must make such as food, house rent etc. The major are those expenses that important to you but not as important as the compulsory expenses, such as clothing and vacation. The minor represents those which you can do without such as entertainment.

Determine Other Sources You Can Explore To Meet Your Financial Goals

In setting your financial goals, you may find out that based on your current regular source of income, your goals may not be fully met. So, to meet your financial goals, you will need to explore other sources of income for yourself. The digital space offers an avalanche of opportunities and options in this regard, explore them.

Determine What To Save and What To Invest

When it comes to meeting your financial goals this year, you will need to save, and depending on the level you are at, you will need to also invest. You must clarify this before the money start flowing in within the year. What percentage of your money will you set aside in savings and what percentage will you set out for investments?

Conclusion

You may not have known it, but a financial plan is what will ensure you can move from just wishing to end the year where you want to end it financially, to getting yourself towards where you want to end it. So, get yourself a financial plan.