DIY Financial Planning How to Manage Your Own Wealth in Just 5 Steps

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Financial planning doesn’t have to be as scary as it sounds. While wealth management is certainly a big deal, especially down the road come retirement, if you stay in-tuned with your finances, you’ll be sure to have no problems at all.

Here are some basics to financial planning:

  1. Set goals:

    Start with some short-term goals like paying off your credit card bill within the next six months, or buying a house within the next five years. Then, move onto bigger picture things. Like starting a family and affording a family home and car, or even your retirement.

    Assign your goals a dollar amount and target date. Of course, these dates are not imperative. Use your best judgement to make an informed guess.
  2. Reality check yourself:

    Are your goals realistic? Figure out where you stand by calculating your net worth. Subtract your debts from your assets (your retirement fund, bank account balance, financial investments), then determine how much you are able to save each month. How long will it take you to accumulate enough money to reach your first goal? How about the next?

    Of course, you’ll have to reality check yourself every couple years to account for raises, job changes, and other changes in financial or family situation.
  3. Protect your financial investments:

    Store away roughly six months’ worth of income in a savings account to make up for any unexpected losses. A job loss or pay cut may impact your financial plan drastically and affect other portions of your life like your mortgage or car payment. An economic recession can do the same thing and affect your family’s quality of life. By keeping a savings account as a buffer, you’re able to allow yourself some wiggle room to make any financial changes less tight.
  4. Draft your will:

    It may sound morbid, but you never really know when it’ll be your time to go. Hire a lawyer to draft your will sooner rather than later in order to manage your wealth and divide it evenly among your beneficiaries.

    Update your will as needed if you have kids or make a large purchase, like a home, estate, or collection of artwork, just as a few examples.
  5. Start investing:

    Financial investments are great ways to turn your money into more money. Be aware though, that with mo’ money comes mo’ problems. Not all investments will work out the way that you want them to. While you’re capable of outlining your financial plans for the most part, this is where you’ll want to have an investment advisor on call.
  6. An advisor can help you make good decisions about stock or companies to loan to. Which investments make the most sense? Which will turn out the best returns? Even if you’re a money enthusiast, that doesn’t make you a financial expert. Make sure that you have a professional on your side.

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