Putting together a financial plan is never a bad idea. Having a strategy on paper that you can follow will make any goals that you might have feel more attainable by giving you a roadmap for how to fund them.
Beyond that though, it will also enable you to feel a greater sense of control over your future. That is important at any time, but heading into 2023 it is perhaps more crucial than ever.
These are turbulent economic times, with a recession being widely predicted. Following these tips will help you plan to be ready for any challenges that the next year may present.
Work with a professional
Unless you come from a finance background yourself, trying to put together a sound plan alone will just be making things more difficult. There are qualified professionals who can support you in this, whatever your financial circumstances.
Even if you are reasonably comfortable, seeking out specialist financial advice in Shropshire or wherever you live will still be the most sensible course. Aside from the fact that a professional will have long experience of developing plans to help people prepare for their futures, he or she will also bring other useful qualities.
Perhaps the most important of these is an awareness of different investment options. Intelligent and varied investments are a crucial part of any plan to grow your money, and a serious professional advisor should be able to come up with a package to fit your personal profile and ambitions for the future.
Start at the finish
What this means is that the starting point for any financial plan should be where you want to end up in your life. That is because the ultimate point of the plan is to provide you with the means to be able to do the things you want.
Your financial advisor will start the process by discussing this with you. Most people tend to think on a day-to-day or week-to-week basis, so working out what you want in the longer term may be quite difficult at first.
That vision will form the basis for the financial plan though.
Know your income and expenses
No sound financial plan can be put in place without clear knowledge of what your monetary incomings and outgoings are each month. This part will be complicated right now by the fact that most people are expecting their outgoings to rise during 2023 due to increases in the cost of living.
With the help of your financial advisor, you can put together a budget for the next year. You should have records of your current income and outgoings and some broad idea of how much the latter – whether it is energy bills or mortgage payments – are likely to increase by.
Clarify your net income
This is what money you have left each month after the various bills and other expenses that you have to pay out have been subtracted. Knowing what this baseline is essential to working out what you can afford to put aside in savings for the future, as well as what sort of sum you have available to invest.
Set up different bank accounts
It might seem an odd move, but having a single account for everything will make both creating a financial plan and sticking to it more difficult. For example, you should have a separate savings account distinct from the main one that you use on a day-to-day basis.
You can then transfer a sum of money that has been agreed upon in your financial plan from your main bank account to the savings one each month. Keeping them separate will prevent the risk of that sum being swallowed up or of savings being used for everyday expenses.
Look for savings where possible
If you want to be able to put aside the maximum possible for the future during a tough economic period, as 2023 is expected to be, then cutting back on expenses should be part of your plan. There are simple ways that this can be achieved, with one example being to prepare more of your meals at home rather than going out or ordering food in.
Another idea is to spend money on luxury items during periods when they are on sale rather than available only at normal retail price. Working out what you can afford to spend per month on luxuries should be part of any detailed financial plan anyway.
Revise the plan as necessary
However solid your initial plan is, there will always be unforeseen events that require you to alter it. That is where a relationship with an advisor can be so useful, as they can help you make adjustments as your situation changes.
The best way to create a good financial plan is to work with a company that has decades of experience and strong word-of-mouth recommendations.