Budget your Life
Plan Your Finances today with :
auto loan calculator
retirement savings calculator
Developing A Financial Plan
I look at building a financial plan like building a house. First you need a blueprint that gives you a diagram of how to build your house. When building a house you need a general contractor and others who are going to do the concrete, plumbing, electrical, and carpentry. The same applies to building your financial plan. You need a financial planner, tax planning, and estate planning with an attorney. Once you determine where you are financially the next step is to set financial goals to where you want to be into the future.
Starting a financial plan consists of two important components. First you need a budget A budget can be created for personal reasons or for a business. The budget can be written or planned on a excel spreadsheet. You need to determine all of your income and expenses. The total income minus expenses gives you the negative or positive cash flow. If you expenses are greater than your income then changes must be made. I remember asking myself is this a need or a want. Do I need this or do I want this. This mindset applies to both ways to increase your income or to lower your expenses. If expenses are greater than income you are not moving forward with your finances.
I am now age 63 and will be age 64 November 2017. Do I want to retire? I answered this question by completing a budget. I have positive cash flow. Next I need to see how much money I have by completing a balance sheet listing my assets minus my liabilities equals my net worth. If I die this is the amount of money someone will inherit from me when I die. I will not share my personal financial situation because it only expresses my own personal interest. Our website it about you.
Assets are anything that pays you income and not having to work for money. Some people think their homes are assets however others feel the expense of having a home reduces your income to invest into other assets.
The assets can be real estate, savings in banks, bonds, mutual funds, individual stocks, options, forex markets, crypto currencies, and other assets. We will discuss theses at a later time.
Liabilities are expenses you have to pay. For example paying your mortgage, car loans, loans for motorcycles, credit cards, and other debts. Liabilities cost you money but assets pay you money.
Deterring your network this very simple. The total assets minus liabilities equals net worth.