The last few years have been tumultuous, and it feels like almost everyone is being more cautious with their finances as a result of the pandemic and then a cost of living crisis. People need to make their money go further to pay for necessities, and it can take longer to save for bigger ticket items like holidays and home renovations.
Against such a backdrop, it’s arguably never been more important to have a stable financial plan in place. But where do you start? And what are the actual, practical benefits of creating a financial plan? Read on to find out more.
A clear direction
Whatever stage of your life you’re in – whether you’re planning for a family, coming close to retirement, or just starting your career – a financial plan helps to give your future a clear direction. Without a firm grasp of what you want from the future, and how this can be financially achievable, it can be difficult to make it a reality.
Focus on what really matters
The process of making a concrete financial plan can be liberating. It allows you to focus on what you really want, and make decisive steps to achieve it. It may be scary at first, and you might be afraid that financial reality will rule out some of your aspirations. But the opposite can actually be true. It could be that making a plan lets you see that the future is more achievable than you might think. It focuses your mind, and gives you a greater chance of hitting the goals that really matter to you.
Peace of mind
In such stressful times, creating a solid financial plan can be a real balm for the mind. We might be worried about our jobs, our parents, our children, managing existing debt, our retirement pot, or a whole range of other financial issues. It’s easy to see how this can quickly become overwhelming.
Although a financial plan does not solve all of these problems at once, it will give you a strong and clear foundation for how you can move forward. Rather than being overwhelmed, the way ahead will now be clearer.
It helps you save money
It may sound obvious, but the role that a clear financial plan plays in reducing unnecessary expenses should not be overlooked. It’s easy to let many expenses fly under the radar as we go about our busy lives, and financial planning can really bring these to the surface – liberating our budget for the more important things in life.
This might involve cancelling unnecessary subscriptions, for example, or finding cheaper deals for essential monthly expenses such as bills, food, and clothing.
Family planning
For those who are planning a new addition to their family, it’s important to take finances into account. It costs a significant amount of money to raise a child to the age 18, and it’s unlikely that financial support will stop there, of course, with the possibility of university ahead.
The financial burden can seem intimidating for many parents, but a sound financial plan can help them navigate these difficulties. From the costs of childcare to education, financial planning takes the guesswork out of these equations and gives you the confidence to plan for the future.
In conclusion
These are only some of the benefits of creating a financial plan, of course – there are many more that should also be considered. When creating your financial plan, it’s important to do as much research as possible to maximise your chances of success.