Aldi & Lidl have taken the supermarket industry by storm as they have cut a lot of “fat” over the whole way of branding and distributing their offering. Individuals like you should have a good financial plan which basically should do the same thing.
Firstly, people must start with what actually is their financial goal. Mine is to get my kids through Education and have a “comfortable” income in retirement. This sounds very simple but in practice, there are a lot of steps to achieve this and I have a list of what plans I have put in place – like children savings and a Pension to reach these goals. I also have plans (protection) in case something happens prematurely. Whilst most of us have some provisions in place in these areas not too many of us think in these terms and sometimes it is as simple as just listing this out. I met a client last week whose financial plan was to “have least €1 more euro than he spent”. Whilst this sounds very sensible the issue with this is that it doesn’t leave much of a cushion.
Your Financial Plan should act like a roadmap. That is to say, it should help you reach your journey in as direct way as possible with the least amount spent to get their!
So what goes into a Financial Plan – 4 Steps
- It starts by listing your Income and Outgoings :
- Generally a month’s worth of bank statements and your salary slip are all that are required for this.
- List out all of your financial objectives. These are things like :
- Paying off your mortgage as soon as possible
- Funding your children’s education
- Paying off personal debts.
- List against your Financial objectives – what is the Financial Solution in place to meet these. So, for example, funding children’s education by using the Children’s allowance to put in a savings plan and so on.
The BIG things to remember regarding your financial plan are :
- To be realistic. There is no point saying you will save €1000 per month when it is practical you can only save €100! And make sure you allow for contingencies.
- Keep it simple. Financial Plans can and in my view should only be 1 or 2 pages as a 10 page plan will only create more work than necessary especially when trying to renew it.
- To challenge it. If you are paying €1500 p.m. on insurances to see if you can reduce the cost of this once a yr (always shop around for insurances – particularly at renewal).
- To review it at least once a year. I am still surprised by people I meet who haven’t reviewed their plans in over 5 years. In that period I had 2 children, moved home, set up a business and the Economy is a lot different to the one 5 years ago – how could my Financial plan be the same.
Just remember, you don’t have to pay for Financial advice and it is useful not to go to a “tied” agent like some of the banks as they will only offer products/services form a particular company and not the whole market. We can’t all run our personal finances like Aldi or Lidl do but if you put in practice the above points, you will like them see big improvements in your circumstances.
If you just need a some assistance, even if it is a steer in the right direction, or someone to look over your existing plan, contact us –firstname.lastname@example.org – What have you got to lose?