Tax season is upon us, and it comes as no surprise that many people are examining their financial plans during the process. The past year has been financially difficult for many of us, as struggles with unexpected costs and unemployment spelled stress for individuals across industries. Kevin Canterbury of Arizona notes that there are a variety of obstacles to financial goals that can occur, however, maintaining a comprehensive financial plan will always be an asset for reaching monetary goals. Here, he draws from his expertise to include a few ways to create a viable financial plan.
Review Your Current Situation
As a financial advisor, Kevin Canterbury has seen individuals of all types of financial realities working towards their futures. Reviewing one’s current financial standing is a crucial aspect of creating a financial plan because it allows for setting feasible goals and realizing them. Kevin Canterbury notes that there are several ways to meaningfully assess your current financial situation. One is to ensure that all your financial documents are accessible and accurate. These statements will paint a clear picture of factors such as take-home pay, taxes, assets, saving history, insurance, and bills. Having all documentation readily available will help with determining assets, one of the most crucial parts of constructing a viable financial plan.
Determine Financial Goals
Determining financial goals is an important step in building a financial plan because it puts all that one is doing into perspective. There are a variety of things that an individual may want to put money towards. For example, retirement, children’s college funds, and home purchases are all common financial goals that people build towards over the course of their career. Having them all logged in some way will help with determining how much money will be needed to reach your specific goals. It is important to remember that financial goals can include both short and long-term planning. The order that you wish to accomplish goals can go a long way towards determining how much should be put towards each.
Create a Budget and Cash Flow Planning
A budget is crucial for a financial plan because it serves as the litmus test for financial goals. Determining where your money needs to go provides a road map for your expenses, both big and small. A budget calculator or spreadsheet can help ensure that expenses such as must-have items, nice-to- have items, and irregular expenses can be accounted for without much brain power. This can prevent overspending and give critical insights into spending habits. While budgets are very important to a financial plan, Kevin Canterbury of Arizona recognizes that they do not need to be set in stone. If you feel as though your budget is not in line with the goals that you have in place, speaking to a professional and utilizing online resources are great ways to reassess and keep building upon your financial future.
Address Debt Management Strategies
If left unchecked, high-interest debt can wreak havoc on even the most fine-tuned financial plans. Kevin Canterbury of Arizona acknowledges that addressing debt and paying them down when possible is an important strategy for managing them optimally. Ideally, working debt payment into a working budget will ensure that payments are not missed and that interest rates do not continue to climb. Some individuals that have different sources of debt may have issues prioritizing them, but a financial advisor can help determine aspects of how much of a budget can safely go towards debt repayment.