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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:
  1. clear vision of the current status
  2. understanding of the desired point
  3. 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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How to start planning

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5 steps to begin

1. Data Collection Before making any plan you should learn yourself a bit: financial habits and regular, mandatory incomes/expenses. The regular incomes (such as salary), mandatory expenses (taxes, insurance, rent) can be planned right away. However, such things as food expenses, garments might be hard to predict. Then it makes sense to track such expenses for a few months to get an idea about monthly levels of those. 2. Select Method Most of the financial advisors suggest 3D budgeting schemas, like X:Y:Z. For instance, you can see such recommendations as 70:20:10, or 50:30:20, etc. Such methods suggest that you allocate X% of your income to expenses, Y% - to savings, and Z% to debt. Yes, it is essential to make some savings even if you pay the debt. It's life, and many things may happen, we always should have some cash quickly available. 3. Create a Plan When you have collected all the information regarding your incomes and expenses, you are ready to create a plan (or

Start planning?

When it's a good time to start planning your money? Never have time for this? fiP will help use the Corona lockout to improve your finances! There are few simple steps: 1. register at fiP 2. make a transaction 3. and you'll get free ProPlus subscription for the rest of the year. Check out:  - elastic transactions  - budgeting  - bank-credits management ... and many other exciting financial features. Ready?