10 Steps to a DIY Financial Plan
Article by Carrie Schwab-Pomerantz
Did you know that 78 percent of people with a financial plan pay their bills on time vs. only 38 percent of people who don't have a plan? Or that 68 percent of planners have an emergency fund while only 26 percent of non-planners are prepared to cover an unexpected cost? Stats like these from the 2019 Schwab Modern Wealth survey reinforce my belief that everyone - no matter their financial situation - can benefit from a financial plan.
So why aren't more people planners? Often, it's because either they don't think they have enough money, or they think a financial plan costs too much. But neither is the case. In fact, you can map out your own financial plan, and it won't cost you a penny. Here's how to get started with a DIY plan.
* Write down your goals - Start by asking yourself what you want your money to accomplish. What are your short-term
needs? What do you want to accomplish in the next 5 to 10 years? What are you saving for long term? Get specific and write everything down.
* Create a net worth statement - Achieving your goals requires understanding where you stand today. So, start by listing your assets - bank and investment accounts, real estate and valuable personal property. Now list all your debts: mortgage, credit cards, student loans - everything. Subtract your liabilities from your assets and you have your net worth. If you're in the plus, great. If you're in the minus, that's not uncommon, but it points out that you have some work to do. Use this number as a benchmark to measure your progress.
* Review your cash flow - Cash flow simply means money in (your income) and money out (your expenses). How much money do you earn each month? Be sure to include all sources of income. Now look at your