"Personal financial plan" - such "impressive", serious expression. Just imagine successful, but slightly tired bankers to "clingy" look, business negotiations, the heavy leather chairs. And then - a holiday in the Maldives, private yacht ... and already it seems to have abandoned the phrase you hear in passing: "Oh, I'm so tired of this sun! "
Do you think all this is very far from you and totally unattainable? But is it? Chances are - you are wrong. You just want to very much. And you will come to the aid of a kind of "magic wand" - a plan. What is it and how to make a personal financial plan?
No mystery there. Strictly speaking, this is a plan of action that you need to take to achieve certain goals.
How it works?
Many people live "paycheck to paycheck." Quite often, such an attitude toward money is based on the feeling of insecurity. And the truth - you never know what will happen tomorrow. And if today it is possible to buy some cute little thing, go to a restaurant or to go to an expensive resort whether to deny yourself this? After all, will not work to save up for an apartment / villa / yacht, why limit yourself in the details?
But sooner or later there comes a time when one begins to wonder what will happen to them in five, ten, fifteen years. You've already asked yourself this question? And, the answer is to make you happy? If not, then it's time to think about their personal financial plan.
For how long should make a financial plan? It can be made at any time - six months, a year, 5 years - it all depends on what you're aiming for. We need to be guided to the most distant goal. For example, if your task - to 50 years to begin to "live on the interest," and you are now 35, you need to make a plan for 15 years.
First of all, confidence in the future. You do not just start up your future to chance, and actively participate in its creation. Fairly quickly you will begin to understand that the goals that previously seemed unattainable - is quite real. You can organize your life and begin to feel a sense of pride. Imbued with self-esteem and stop being afraid of the future.
Sounds good? But how to make a personal financial plan? Start simple.
Of course, to start strict schedule - which means something to limit - your life, you need a boost. What could be the impetus? Of course, the presence of target.
Every person is different. Everyone has different dreams and aspirations. And the level of income at all too different. Therefore, the objective will be different. Imagine what you would like to reach, say, 15 years from now may be to buy a big apartment? Or send a child to study in England? Or go to travel around the world? Do not be afraid to dream. However, your desires should be, after all, a bit of "tied" to reality.
Set specific timetables for achieving the goals. For example, in one year you want to buy a car, five - apartment, and 15 - to begin to live solely on the percentage of capital, ie, start getting passive income.
Carefully review the list of goals and "dreams" that you made. You did it on paper, right? Determine that this is the most important, and that - minor. Make it easy enough.
Suppose you have two main tasks. First - to buy an apartment. The second - for 40 years to have a passive income of $ 3000. What is this important? Let's say you already have some kind of shelter - albeit not such as you would like. And while you're just afraid of panic impoverished old age. Then, the main aim is to produce passive income.
But if you have three children and did not have a "corner", you are tired of living with their parents or to wander in a rented apartment, then, most likely, buying an apartment will be a major task.
The division into major and minor tasks will help you to understand what, in the event of "failure" of your plan, you can sacrifice, or what items should be adjusted.
Calculate the income and expenses
If you're up to this point has never led home accounting, you have to start right now. Before you create a financial plan, you need to figure out where the "funneling" your money. Very often, people's perceptions of the costs are far from reality.
Have you ever tried to calculate how much money a month out, for example, the purchase of chewing gum? Or cake in the nearest cafe? Try it. The result may surprise you. Therefore, in the next 2-3 months - and that is how much you will need in order to complete the picture - "best friends girls" are not at all the diamonds, and the handle, a thick notebook and a calculator. Be sure to collect all receipts and record even the "penny" costs.
Divide all information on groups and enter it into the table. For example, "utilities - the amount of", "food - the amount of", "entertainment - sum", etc. If you lead such accounts for you - the usual thing, you can go directly to the next step of preparation personal financial plan.
Assets and liabilities - what is it?
Do not be afraid of specific terminology. Everything is very simple. Assets - is all that brings you income. Assets are bank deposits, securities, shares of mutual funds. Liabilities - that leads to costs. For example, bank loans, debts, etc.
Interestingly, one and the same thing in different situations can be both a liability and an asset. How? It's very simple! For example, a car - it's versatile. You have to buy gasoline, to spend money on maintenance, buying new parts, etc. But! If you begin to look for jobs on the machine - it will turn into an asset.
Same with the apartment - as long as you live in it, you have to pay the rent, make repairs, buy new furniture - that is, spend money. And if you hand over its lease and receive revenue - it becomes an asset.
Think about whether you have any liabilities that can be converted into assets. For example, land that no one will ever do. Or an old house in a remote village, inherited. Maybe something from this can be sold - even inexpensive - and invest that money on favorable terms.
Unfortunately, life is unpredictable. Dismissal, the next wave of financial crisis, accidents - all of which can destroy any financial plan. Therefore, before you begin to invest - invest - the "extra" money is necessary "to err." That is, to reduce the risks.
Financial risks - the worst enemies of even the most carefully thought-out plan. Of course insure 100% of all the misfortunes and troubles still will not work, but to minimize the risk it is possible.
What are the risks and how to reduce them?
The first group - it's unplanned expenses and unemployment. Unplanned expenses - is not necessarily any large sum. Repair of the washing machine, a visit to the dentist, the urgent purchase of a new TV to replace the hopelessly break old ... but who knows what else. And each such expense will punch a small hole in the structure of your financial plan.
And what can we say about the sudden loss of jobs?
How to protect yourself from this? Financial consultants recommend to create a "reserve fund". What it is? It is a certain amount that is sufficient to, without external financial flows, you can easily "survive" 3-6 months.
The reserve fund of the best kept in the bank account with the possibility of replenishment and partial withdrawal. Usually, the interest rate on this account is 5-8% per annum.
The second group - this disease and accidents. Even the normally cycling can result in a long "vacation" in the hospital. But have you ever thought what position will be your children, if you something suddenly happens?
In order to protect themselves from such situations, you can use the program of voluntary health insurance and life insurance. The cost of insurance is not so great - in the year about one percent of the sum insured.
Also do not forget to buy insurance for traveling abroad. Then, if necessary, you can get free medical care there.
The third group - property risks. The fire in the country, the flood in the apartment, car theft - such situations are, unfortunately, not uncommon. In the "fight" with them it takes a lot of effort, time and, of course, money. Use the property insurance program. This is especially true if you rent an apartment to rent or are rarely at his dacha.
The fourth group - "damage to third parties." This situation is very familiar to most motorists. In addition to the compulsory MTPL insurance, you can still use and voluntary DSAGO. This "save" you, if the amount of payments on obligatory insurance does not override the amount of damage.
Securing the future. To solve this problem, you can use rechargeable bank accounts or insurance plans of private pension funds. Insurance contracts are, as a rule, at least 10 years. Therefore, it is recommended to make investing in convertible currencies - dollars, euros or Swiss francs.
At this stage, in order to understand how to create a personal financial plan, you need to "reduce the debit with the credit." Calculate your monthly income and add to his profits from assets. Subtract the amount of the resulting costs.
The resulting amount - is the investment potential. Properly invested the money you can have a stable income. Sounds great! But how and where to invest this money, not to "burn" and not lose the last?
To begin, you must decide whether you yourself determine investment strategy, or contact your financial adviser. Unfortunately, and in that, in both cases, there is some risk.
Types of Investors
No matter which option you choose, it would be good to determine in advance what type of investor you are. What are the different types of investors? Conventionally, they can be divided into three main groups.
- The group first - conservative investor
These people carefully weigh his every step and agree to invest only if absolutely confident in a successful outcome. For the conservative investor the most important thing - to keep their investments. He was never at risk, and take all measures to protect their capital.
Of course, in this case, a conservative investor incomes are low - a type of investment usually gives 3-5% per annum. But they are stable! As a rule, "conservative" never plays, and slowly but surely achieve your goals.
If you belong to this type of investor you recommend a minimum of 60% of its investment potential stored in bank deposits or invest in savings insurance programs.
- The second group - a moderate investor
Moderate investors, of course, also important to keep their savings, but he does not want to settle for a minimum income. So sometimes he risks. But it always tries to maintain a balance between low-risk and risky investments. In case of loss, he will repay their debts due to income from the "win-win" investments. Moderate investments bring, as a rule, 10-12% per annum.
Financial advisers generally recommend moderate investors to share "investment portfolio" into two equal parts. Half invest in stocks and bonds, and the second part - to deposit or make to the insurance program. Suit also mixed mutual funds.
- The third group - the aggressive investor
The main purpose of the aggressive investor - "fortune." It relies on high-risk stocks. Of course, if successful, such securities brings the highest income. People of this type can be for a single deal how to get rich and become bankrupt. On average, if all goes well "scenario", an aggressive investor receives 12-20% per annum.
As a rule, aggressive investors - are professionals clearly understand what they are dealing with.
If you belong to this type of investors - safely invest most of the savings into hedge funds, stocks and mutual funds. However, forget about conservative investments, too, not worth it.
How to determine what type of investor are you? Well, first of all, it depends on the age and sex. As a rule, women are more careful than men. A young investors are more fearless than middle-aged people. Although, of course, any rule there are exceptions.
Also, in order to better understand yourself, you can use special psychological tests.
Drawing a table
Well, you're almost there. You're the most important thing - to organize all the information and have to start to realize their personal financial plan. In order to have everything clearly, it is best to make a table. Here there are two ways.
The first way. It is for those who have the phrase "make table" is rampant attack of yawning. If all these calculations / estimates too painful for you, if you feel that the "linked" to them, to make it easier - contact your financial advisor. By the way, the majority of novice investors do just that.
However, there is one drawback - your spending gained another point.
The second way. He - for thrust. For those who want to thoroughly understand how to create a personal financial plan. Sit comfortably at the computer, put next to the calculator and tell your "home" that they did not stick to you 2-3 hours. Open Excel and paint the table:
- Count One. "Year". In this column shall be entered in ascending order, the years from the current year and ending "of the dreams."
- Count Two. "Capital at the beginning of the year." Compare income and expenses for the previous year. Add to this the amount of accumulation of all that you have at the moment. You have put them on a bank deposit, right? So, you get a 5-8% per annum.
- Count third. "The amount of investment." This is the money that you put at the end of the year. In order to define it, you must first figure out how much you will have money on deposit bank deposit. By calculating this amount, it is necessary to subtract from it your "emergency fund." Still remember? This is money - which should be enough for 3-6 months a comfortable existence.
- Count Four. "The financial goals." Contain all their dreams with a string of the year in which you want to implement them.
- Count Five. "Investment operations". This column will be just three columns: "conservative," "moderate" and "aggressive." You have already decided what type of investor are you?
- That and "scatter" the sum of the third column - "investment amount" - the columns, in accordance with their views.
- Count sixth. "The funds remaining after the investment." This is - your insurance reserve. Therefore, the number in this column should never change.
- Count seventh. "The state investment." It also needs to be divided into 3 columns: "conservative," "moderate" and "aggressive." The number it will show how "grown up" your investment.
- Count eighth. "Balance at the end of the year." In order to fill this space it is necessary to add up the numbers recorded in the sixth and seventh columns. From this amount, deduct the money spent on the realization of financial goals.
- All! Table filled.
Then the number obtained in the eighth column, it will be necessary to copy the second line next year.
Take a good look at the "work of his hands." If all the numbers in the table are of positive significance - all in order. So you correctly assess your capabilities and your goals are attainable. Now the main thing - not to retreat and to follow the plan.
Something does not add up? Dont be upset! After all, the financial plan is not something immutable - it is possible, and sometimes necessary, to make adjustments.
Due to what you can do? There are several possibilities. For example, you can increase the time frame to achieve a particular goal. Or do not plan to purchase five- and two-bedroom apartments. You can again carefully weigh your "dream". Perhaps some of them are not so crucial for happiness?
After all, in fact, the most important goal - is to gain confidence and become successful and wealthy person. And on the way to this goal, you have already made a very big step.
So, all you must succeed!