2024 Ultimate Guide to Financial Planning: 7 Must-Do Steps Recommended by Experts
- 懶大 (Lazy Da)
- 財務規劃與心態
- Last updated: October 15, 2023
- 2 min read
In this article, you'll learn:
For many people, getting started with financial management isn’t easy. But if you’re a beginner in financial planning, it can be even more challenging. Here are some things to keep in mind before you start financial planning, which can help you enter the world of finance and start building a solid financial foundation.
Understand Yourself
Before you start managing your finances, you need to understand your own financial situation first. This will be the basis for setting goals and making plans. You can start by understanding your income, expenses, assets, and liabilities to determine your assets and net worth.
First, ask yourself a question: How much money do I need? If the answer is “the more, the better,” then I’m sorry, you can’t take the first step in financial management correctly. You can refer to this article to adjust your mindset.
Set Goals
Setting clear financial goals can help you better understand your financial situation and prepare for the future. You can set short-term, medium-term, and long-term goals, and make sure these goals fit your actual situation and timeline.
If you can answer the first question above with a number, whether it’s a short, medium, or long-term financial goal, then congratulations, you have a chance to accumulate your wealth faster.
Create a Budget
A budget is an important part of financial management that can help you control your spending and achieve your goals. When creating a budget, you need to determine your monthly income and expenses, and then determine your necessities and optional items to help you prioritize necessary and unnecessary expenses.
Many people are most likely to ignore creating a budget because it is a very painful and annoying behavior. In real life, there is always a lot of unexpected money to spend. But unfortunately, in a normal working situation, your resources are limited, so you need to cherish these resources to spend.
Choose Tools
Investing is one of the important means to achieve financial goals, but for financial planning beginners, investing can be difficult. Choosing the right investment products requires considering factors such as risk, return, and your own investment goals. You can start with basic products such as savings accounts and fixed deposits, and gradually explore more complex and risky investments.
Saving is a “preparing” behavior, and investing is an action to “multiply money.” Usually, we choose conservative tools to prepare for daily needs, but we also increase some risky investments through fixed expenditures in order to obtain higher returns.
Risk Management
Risk management is an important part of financial management. You need to determine your risk tolerance and risk preference to ensure that your financial risks are within a controllable range. However, “insurance” is a very suitable tool for diversifying financial risks.
The purpose of insurance planning is to avoid delays in achieving financial goals. If you can use insurance correctly, then you also have the opportunity to accelerate the growth of your wealth.
Continuous Updates
Financial management requires certain financial knowledge, especially when you are a financial planning beginner, learning basic financial knowledge is very important. You can start by understanding basic financial planning, learning how to read your own financial reports, and understanding taxes. The updates here are not about constantly delving into more in-depth financial tools, because spending too much time delving into financial tools may not necessarily get corresponding returns.
Stay Rational
Always keep a calm and cool head when making investments or financial decisions. Don’t make hasty decisions because of emotions or external pressures. Before making any financial decisions, you should carefully consider your needs and wants.
In everyone’s financial planning, it is easy to be affected by external influences, which may cause deviations in their financial goals. However, this is constantly happening in our lives.
Further Reading
懶得 (Lazy to) Conclusion
Overall, as a financial planning novice, starting financial planning may be confusing. However, if you can take some basic steps and learn some basic financial knowledge, you will be able to build a solid financial foundation and achieve your financial goals. Most importantly, don’t forget to always keep a calm and cool head to avoid making hasty decisions.
The most important thing is to first understand why you want to live, why you want to work, why you want to save, and why you want to invest.
Back to the question in the first paragraph, if the answer is “the more, the better,” then the probability of financial failure may also be getting higher and higher.
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