3 Things You Need to Know Before Starting a Financial Plan

Can you imagine a life with no outrageous credit card debt and a growing nest egg? Oh, and of course, having enough savings to splurge on a nice vacation or a hobby? That is what financial freedom looks like.

Sure, it’s something anyone would want, but talk of finances can intimidate even the most confident. In these times of uncertainty, you might doubt whether financial freedom is realistic at all. But it is – and a cycle of uncertainty is exactly what financial planning intends to break.

Remember, if you need help with your financial plan, our Perth financial planning experts are here to help you.

Why Have a Financial Plan?

Having a financial plan is the best way to achieve financial freedom. When you plan, you look at the big picture and map out long- and short-term goals to turn that vision into a reality. Failing to plan can get your financial decisions and goals derailed.

Don’t get us wrong – financial planning takes a lot of commitment and preparation. To help you, we have created this guide on how you can create a financial plan. Basically, it boils down to three things.

1. Your Goals – What are they?

To develop a financial plan, set short-term, mid-term, and long-term goals for yourself. What do you want to do with your finances? Examples are:

  • Short-term goal: Be free from credit card debt in 24 months.
  • Mid-term goal: Purchase a house in 6 years.
  • Long-term goal: Set up a retirement fund.

2. Your Budget

With goals defined, the next step is to set up a budget and track your expenses. Through this, you’ll be able to understand your spending behaviour and make some changes. To help you, there are several budget planning software and financial tracking apps you can use.

Please speak to Precept Financial Services if you would like some help in this area.

3. Your Monthly Expenditure

Stick to your budget by tracking your monthly expenses. To do this, you can calculate your burn rate – or how much is needed for you to continue living as you do. The idea is to keep your burn rate as low as you can. Knowing your monthly expenditure can help you pinpoint wasteful spending and allocate savings into other income-earning activities.

Our advisers at Precept Financial Services are able to help you work out a detailed budget and analyze areas where there is a potential improvement.   Once this is done we can then formulate strategies to take advantage of any surplus income so this is used wisely for your benefit.  

Please contact us on (08) 9204 2222 to arrange a complimentary first meeting.   

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

Please see our Financial Services Guide for more information.

Precept Financial Services Pty Ltd (ACN 140 538 147) as trustee for SF Unit Trust trading as Precept Financial Services is an authorised representative of Charter Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee No. 234665