Creating a Financial Plan: Your Key to Breaking Free from Poverty
At times we need to have a reminder that we are not on this journey alone. We have all heard the stories and maybe even experience it, and have taken the decision that this is enough and we need to actively see a way out of poverty. Note, many are on the same path, and are striving towards a better life. How do we do this then?
This is why we are here. One powerful tool in the tool-kit is to have a personal financial plan, and also, Why should we even bother to create one???
What is a Personal Financial Plan?
At its core, a personal financial plan is a roadmap for your money – it lays out your income, expenses, savings, and financial goals. Think of it as a GPS for your financial journey. It helps you navigate where you currently are and where you want to go.
It is important to even write or sketch this down first.
Ideally you also need to know where you are now to see the progress made as well. Some of the positions we are in today may be as a result of some decisions which we may have made. This also means that your plan and decisions can work to get you out of your current position. As it suggests, it is also is personal as each person’s position is unique
Why Create a Financial Plan?
Creating a financial plan might seem daunting, but it’s one of the most empowering steps you can take. Why? Because it puts you in the driver’s seat! When you’re living paycheck to paycheck, it can feel like you’re just reacting to life’s financial challenges. But a financial plan allows you to proactively manage your money, set goals, and work towards achieving them.
Imagine knowing exactly how much you need to save each month to buy a car that will help you get a better job, or how to build an emergency fund to prevent a financial crisis. A clear financial plan gives structure to your financial life and fosters a sense of control.
The Importance of a Financial Plan
- Clarity on Income and Expenses: One of the first benefits of having a personal financial plan is gaining a clear understanding of your income and expenses. Many people are surprised when they see where their money is going. Tracking your spending can highlight unnecessary expenses and help you find opportunities to save.
- Setting and Achieving Goals: A good financial plan helps you define your financial goals, whether they are short-term, like saving for a new job opportunity, or long-term, like homeownership or retirement. By outlining these goals, you can develop a strategic savings plan. This means you’ll have a tangible target to work towards rather than just wishing for a better financial situation.
- Building Financial Security: Ultimately, the goal of a financial plan is to create lasting security. Regularly reviewing and updating your plan enables you to respond to life changes (like a job loss or family add-ons) without slipping back into poverty. Having a financial safety net, thanks to budgeting and smart saving, helps insulate you from the unexpected.
As a guide – companies sit and map out where they are and where they want to go. Similarly, this is the principle that we can apply to our personal lives to map out (plan) where we want to go.
As a guide and a form of motivation, the proverb which can be noted is this, “It can take a small axe, to cut down a big tree…” It therefore means that even though you may not see the big result immediately but the effort is cumulative. This small action can move from a financial survival to real wealth, based on the plan. It also means that your plan can be adjusted as life is also real, and things happen as well, until the overall circumstances become much more stable.
The Quiet Upgrade
So, why wait? Start building your financial plan today! Remember, the goal is to create a guiding document that evolves with you and your situation. There are plenty of resources out there to help you, from online budgeting tools to financial workshops, and start taking full ownership of your financial priority.
Remember to keep it SMART (Specific, Measurable, Achievable, Relevant/Realistic & Time-bound) as well, and audit your spending in blocks, maybe eliminate unhealthy vices as well. As a motivation, it may be good to follow persons on their social platforms, or in hang-out spaces, that are where you want to be as a form of motivation and also as a form of coaching.
While it may feel overwhelming at first, the benefits of having a financial plan are immeasurable. You gain clarity, direction, and the power to change your life. So take that first step – your future self will thank you for it! There is enough information out there to help you sort out your game plan…
Remember to practise gratitude of what you already have and own as this may help psychologically, so get started on mapping out your financial plan.!!!
