There is no formal education that focuses on personal finance and financial planning in the education system, it is only too common to see individuals and families having too much debt, not enough savings, unrealistic expectations of retirement and no financial plan or goal.
My personal believe is that there needs to be at least some sort of a personal finance course throughout the school years or that at least everyone should make the effort to take on a personal finance course.
Many believe it is not really possible to become “rich” or a “millionaire” without being an Executive or inheriting some money, this very far from the truth. With some basic financial understanding, a plan and some discipline it is a very reasonable expectation to enjoy a very comfortable retirement and become a “millionaire” or “rich”. I am not promising that you will become a millionaire or anything, I just hope to be able to help you with the first two parts, basic financial understanding and help develop a plan, the rest is up to you.
A financial plan is not a one step process; it takes some organization, motivation and education. I will try to lay out a step by step financial planning process; this should only serve as a guide not a definite plan. Since financial planning is a fairly complex matter and involves many aspects of ones personal finances, I will do this over several posts discussing different areas of personal finance and how to incorporate them into your financial plan.
One of the main reasons why people find financial planning complicated is due to organization. All the needed information is not properly organized making things complicated and sometimes frustrating. If you organize your documents it will reduce a lot of the confusion and make things easier to follow.
So before you get started find all your statements, this includes bank statements, investment statements, notice of assessment, insurance policies and anything else that you thing might be important. Have a folder for each type of document and organize them in order. This may take sometime now, but it will save a lot of headache and time later on.
Too often I see people with decent income and low expenses living pay check to pay check, majority of them do not know where they spent their money. What I recommend is try to keep track of your spending habits at least over a one week period, two weeks would be better. I know, I know this is boring and hard, but this will benefit you in couple of ways. First you will realize how much money you waste and second it will help you in the next stage, budgeting.
Ones we have the above tasks completed we can move on to the next steps, which I will post next week.
Financial Planning Basics- Guide To Financial Planning