What is "financial plan"

What is a financial plan?

For most of the actions in our life we have a plan. It can be explicit (like a house building plan) or implicit (we go from home to the office and always have a route, which is actually a road-plan). Cleaning our apartment we also plan - first clean furniture, second - floor. If we plan such trivial things - why don't we plan our finances?
Financial plan is one of the most important roadmaps in our live! But we usually pay so little attention to it. Why?

Why we don't plan finances?

Do we really have an answer to this question? We lie to ourselves that we have no time for this. But is it really normal to have no time for such an important thing as money? Can we live without money? If the answer is "no", why we do not pay attention to this matter?
I guess that people usually understand that their financial status is not as good as they would like to. And the reason of not having a financial plan is simple: people do not want to the the truth. They are afraid of it.

Why financial plan is so important?

Say, we understand our financial status does not satisfy ourselves. Then... it needs to improve. But to improve something we need three things:

clear vision of the current status
understanding of the desired point
the roadmap from #1 to #2.

and yes, it is actually the financial plan!

Another case - we are happy with the financial status we have now. The keyword is "now". Because the situation may change in the future, and we should be prepared. We might need to build a financial "safety cushion". And, like any building it requires a "building plan" - financial plan.

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Budgeting

What is a budget? Wikipedia gives the following answer: "A budget is a financial plan for a defined period of time."

So, it is a financial plan. Basically this is a list of incomes, expenses etc.
However, most of the personal finance apps track "budget" as a set of limits. Like:
- how much may I spend on food
- how much may I pay for fuel
and so on. Such limits are usually set per month.

Setting limits is good approach, it can help control the spendings when user sees he is close to limit, but the month is in its middle.

However, this is not sufficient for The Finance Planner. We think of budget as a list of planned transactions. In fact, this is a small difference: if you plan to spend $300/month on fuel, you just schedule monthly transactions. And when you buy fuel, you cut (split) the planned transactions.
For instance, if you spent $20 on fuel today, you cut the planned transaction and get two:
- $20 - committed (paid)
- $280 - still planned.
This slight difference …

Finance Planner Birth

Basic Financial Questions-Where is my money gone? -How much did I earn in the past? -How much do I have right now? -What can/should I spend less on?
These basic financial questions can be answered only by 39% adults in the US (Business Insider). 61% do not track their spending. The ability to answer these is the first step of financial literacy. There are many tools on the market that help track earnings and expenses. Advanced Questions-What should I pay this month? Tomorrow? -How much money will I have in 8 months? In a year? -Is it worth to take a bank credit to start a new business/project? -When can I buy a new house/car? -Will it be possible for me to pay the mortgage for the new apartment?
These advanced questions for personal/family finance management is that our team wanted to help answers.
We took up a challenge to create a finance management system for individuals, families, small business. Our solution is named “The Finance Planner” or simply "fiP" and planning was our prim…

Poor or rich?

Simple question from the first sight.
U.S. Census Bureau defines poverty as a certain income level, which is $1062 a month for a single in US.
However, the life is not such easy. All people are different and have non-identical needs.
House rent, mortgage are not the same everywhere. Deceases, allergy any other special needs - all these raise the expenses.
Another definition of poverty is inability to keep expenses under incomes. And such way is hard to define: under certain circumstances even $1M of income is still poverty.
Furthermore, many people do not see themselves in poverty: the feeling of high incomes keeps them blind towards expenses until it is too late.
We take new financial liabilities, debts, burden. Buying a new house or getting a baby - all this raise expenses and we feel wrong only when our savings fall to zero.

The threshold, point where the lines of incomes and expenses cross, is often not noticeable for the majority. But even this is too late to start acting.

The wis…

Finance Planner

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