The Importance of Financial Planning Essay

Throughout life we a faced with financial decisions. Much of the time we are unable to manage our funds the way that we would have liked. Successful financial planning allows you to have a clear prospective on your future financial needs. In order to gain the financial freedom of your desire you will need to start by reviewing your current situation. Like many others my finances are not what l? D like them to be. With everyday that passes I ask myself questions like , ? What if I lost my income ?. These are one of the many ? What if ? Sections that I think of when I am managing my finances. I know that I must be prepared for anything that may happen to my financial status. In order for me to figure out what my financial status is, I must flirts determine my financial situation. I need to keep in mind of any defined goals that I may have. Goals are great as long as I can provide for them. Reviewing how much money I have in assets and belongings gives me a better idea of how much money I am worth. Knowing when and how to spend and save Is essential when planning your finances.

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Taking full responsibility for all of my financial decisions is the beginning of financial freedom. To know exactly how much money I am worth I must get Into the details of my belongings and income. I know that I have a boat that is worth about three thousand dollars I also have three vehicles that are worth about two thousand dollars a piece. Now that I know how much money in assets that I have I need to figure out what my annual income is. Measuring the amount of money I earn and spend every year gives me a better Idea on how to manage my funds.

My annual earned income Is bout fifty thousand dollars a year. This Is money that I earned from my employer In a one year period. You can also generate Income with Investments. Although I do not have any investments at this time, I know that I can invest my funds in the future to create a positive cash flow. Now that I have determined how much money I am worth I need to calculate all of my expenses. I have many expenses to pay for such as my car payment, Insurance and rent. These are bills that have to be paid every month. Each of my expenditures needs to be totaled up into a annual expense.

Once I have all of my expenses totaled I will need to compare my net worth to my expenses. If I subtract the amount of money I have spent from the amount of money that have earned my total will be how much money I have left. If I would like to increase the amount of money I have left I may consider investment opportunities. There are many other ways of ensuring my future finances. Mutual funds are a great way to prepare for the future. Mutual funds are generally safer than investing. I am a person who likes to invest my money in real estate.

The market for real estate investing is good right now. What I like to do is buy cheap homes and wait to sell them until the market is good for the seller. Doing this I am investing the money that I have and gaining more then what I started with. Investments give us options that Now that we know what our status is we need to start a budget. A budget is always a great tool to use when you are wanting to buy something. You need to know if what you are buying fits into your budget. To create a budget you need to take the total amount of money you


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