Introduction
You've heard of blueprints. They're the plans that show how a building will be constructed, and they provide guidance for how the structure will be built. In the same way, creating a financial blueprint is a reliable guide for your financial goals and objectives. It doesn't tie you down to any particular path or option, but it does provide direction on where you want to go with your money — and how to get there. Here are six steps to creating your very own financial blueprint:
Your relationship with money.
When you are creating your financial blueprint, it's important to think about your relationship with money. As you consider the following questions, keep in mind that the answers will be different for everyone:
- How do I feel about money? Do I want to earn more? Do I spend it freely, or do I feel guilty when spending money on myself?
- How do I spend my money? Is it on food and clothes or is it on fancy dinners and cars?
- How do I save my money? Do I set aside some every month for savings or does that seem like a waste of time because there are so many things I could be buying right now...like a new bag!
- What is my financial comfort level (how much can we afford)? Is our lifestyle sustainable given our income level and current expenses—or should we adjust our lifestyle accordingly so that we can live within our means (and still enjoy ourselves!)
Crystallizing your goals.
Now that you’ve identified the steps in your money management plan, it’s time to make a list of what those steps are and how they relate to each other.
- What are your goals?
- Why do you want them?
- How will you achieve them?
- When do you want to achieve them?
- How will you measure success (if at all)?
Identifying the problem, and gaining clarity on what you want!
As you begin to identify the problem, it's important to gain clarity on what you want.
What is your vision? What do you dream of? What motivates and inspires you?
For example, if one of your goals is buying a home, who will live there with you? How many children would like to have? Do they all go to public school or are some going to attend private school? Are all of them going to college and getting their degrees—and if so, at what age do they start taking out student loans?
Financial comfort level, savings and investment ideas.
You will want to consider the following factors:
- How much money you have saved.
- How much money you need to save.
- How much money you want to invest and what to invest in.
- What your financial goals are (e.g., retirement, education) and how long it will take you to achieve them. This will help determine what level of risk is appropriate for your investment strategy and time horizon.
Why you need to create a plan for your investments, not just make them.
What's the difference between a plan and a goal? A goal is something you want to achieve. A plan is a roadmap for getting there, with clear actions and steps along the way.
As you begin to invest, it’s important to understand the difference between a plan and a goal. A goal is something that you want to achieve. A financial blueprint is not really about what you want; it’s more about what you need.
Having a financial blueprint lets you take control of your future by making sure that every decision you make has the potential to move you closer to where you want to be. It also helps keep things organized so that nothing falls through the cracks or gets forgotten about—or worse yet, never starts at all! By taking time now to create this blueprint, it'll save lots of time in the future when it comes time for making decisions about investments or other financial matters.
Conclusion
Creating a financial blueprint is the first step to achieving your financial goals. It will help you make better decisions, so you can achieve financial freedom sooner rather than later.
