You should never doubt how powerful financial plans can be. If you want to feel more secure about your future, you might want to work on these plans. But the truth is, having these plans will not just help improve your future. It will also bring a lot of benefits to your present life.
And if you think about it, we will all need a bit of help considering everything that’s going on right now. According to one research, 47% of Americans think that the rising cost of living is the main reason why their financial security is threatened.
If you thought that’s bad, this research happened before the coronavirus pandemic. And we all know how bad things have gone financially since they started locking down states and cities all over the country.
People were forced to stay at home to avoid getting infected by the dreaded virus. Then businesses had to close down because nobody manned the shops and there were no customers. The government’s funds were tied to helping the country survive the pandemic.
It’s not hard to figure out how bad things have become since the start of the year. And every household is struggling to cope with their respective finances.
What can you do if everything around you is falling apart? Well, you just have to will yourself to survive it. Because this is not the first time we went through something like this. And it will also not be the last time.
So what can you do?
You just have to make sure that you have the financial plans that will help you survive every time it happens.
How financial plans can make your future secure
You might be wondering, how can financial planning affect your present? It’s easy to understand how it can be beneficial for your future. But how will it affect your present life?
It might not be evident but having financial plans will bring 3 distinct benefits for your present life.
Forces you to look forward
Having financial plans will force you to always keep your eyes forward. Or at least, it will give you something to look forward to. And believe it or not, it will really help get you through tough times. Because when you are used to looking forward to the future, you will know that there is an end to whatever you are experiencing. If you have that in mind, it will be easier to bear the sacrifices that you need to make.
Like if you have to live below your means to pay off your debts. It will be hard to do that but if you have your eyes set to the future, you know it will do you good. How? Because you have made plans for the future and this is one of the things that you need to do to get there. That motivation can really make the sacrifices easier to go through.
Gives you financial goals
In order to achieve your financial plans, you need to set goals to make it happen. Among the goals that you can set includes saving up for retirement, paying off your credit cards, saving up for a downpayment for your home, and even saving money for your emergency fund.
All of these goals can get you closer to achieving the plans that you have for the future. And these are the things that you can focus on. You will realize that as you keep your eyes on your financial goals, you will feel a sense of purpose. Every morning, when you wake up, you know what you have to do immediately. That’s because you have identified the goals that you need to work on based on your financial plans. And this will help you through your present situation and distract you from feeling any negative emotions about your predicament.
Encourages you to make the right choices
Finally, having financial plans will also encourage you to do things right when it comes to your finances. You don’t really have to use a lot of financial tools to be an expert at managing your own finances. But you need to have the right encouragement to make sure you are making the choices that will get you closer to achieving your goals.
But how can you do this? It’s simple. Focus on the future that you want to have. After all, during financial planning, you had to picture what you want to happen. And you centered your goals around the future that you envisioned.
That is what you will use to influence how you make decisions. The need to make your ideal future into reality will encourage you to make the right choices that will lead you there. And that will make it easier for your present self. There’s no need to stress because you are certain about what has to be done to reach your future and you are doing that.
Avoid these two mistakes to make your financial plans work
Once you have your financial plans in place, how will you make sure it will work? After all, creating those plans is nothing if you cannot make it come true. You just wasted a lot of time and effort to create them if you will not see them to completion.
While there are many things that you can do to ensure that you will follow through with your plans, there are also mistakes that you need to avoid at all costs.
Failing to commit to the plans
The first mistake is failing to commit to the financial plans that you have set. It’s just like any other plan that you have made. Whether it’s a budget plan or a repayment plan, it will be useless if you don’t implement it. Or if you don’t work hard for it.
In case you are finding it hard to commit to the plans that you created, you need to ask yourself why. Maybe the plans were unrealistic. You might have aimed too high. Or maybe you overestimated what your finances can afford.
There are also times when you cannot commit to your plans because something unexpected happened that compromised your future. If that’s the case then you need to revisit your plans. You have to be flexible enough to know what to change. Otherwise, you will just be stressing yourself over a plan that you may never be able to reach. It’s unnecessary because there’s no rule against changing your financial plan.
Borrowing too much debt
Another mistake that you can make is borrowing too much debt – to the point that it’s already hard to pay off. Or you are already compromising other expenses to pay it off. If that’s the case, you will really destroy your chances of reaching your goals for the future.
According to a report from the New York Federal Reserve, the US household debt rose to $14.3 trillion during the 1st quarter of 2020. It’s considered higher than the debt during the peak of the Great Recession. With the economic situation right now and the rise in unemployment, it’s safe to assume that the debt is probably higher now. We can also assume that a lot of plans have gone out the window.
If that is something you can relate to, it might be best to do something about your debt before you get started on your plans. Or maybe, you can lower your monthly contributions towards your financial goals. That way, you can work on both paying off your debts and working on your financial plans.