Building and maintaining a stable and secure financial state is a big challenge many people face today. In fact, in current economic hard times, financial stress and money worries have acute negative effects on people's mental health, which shouldn't be the case.
While people want the financial security and glamour that money can bring, there is no magic formula or simple trick to achieve that financial success.
Instead, financial success is a result of concerted efforts that entail different healthy financial habits and proper money management, including budgeting, setting financial goals, saving, spending wisely, and paying your bills on time.
A way to ensure that you stick to and practice healthy financial habits and proper money management so you don't run into severe debt and financial problems is to build a financial plan.
What Is a Financial Plan?
A financial plan is a comprehensive document that shows where you or your business currently is financially and where it intends to be. It details how you can secure your finances, increase your earnings, and sustain your wealth long-term.
A financial plan helps to streamline your money habits and finances so you enjoy a more secure and fulfilling financial life—maybe even finally afford to live the glamorous life you have always wanted.
However, creating a financial plan can seem like a daunting task. But it actually is not all that complicated, if you are committed to better money management and a secure financial future.
Best Strategies and Tips to Build a Solid Financial Plan
Many of us plan many other aspects of our lives, including career, marriage, and family. However, when it comes to financial planning, it’s often a different story. We are not all that committed to planning for our financial future, which is bad.
Building a solid financial plan is key to financial freedom and achieving every other goal you have set for yourself. So, how do you build a solid financial plan that helps you to better manage your money and increase your earnings long-term?
Here are seven key steps and tips for creating a financial plan that ensures your financial state moves from strength to strength both in your personal and professional life:
1. Articulate your financial dreams
The first step to building a solid financial plan is knowing what you want. Articulate your financial dreams and map out a plan that would fit perfectly into it and help you reach that desired goal.
Be careful not to let other people decide for you what to do or the goal to pursue. Know your own goals as an individual, a team or as an organization and work diligently towards it.
If your dream is to retire early or clear off your debts at a certain age, write that down and then you’ll be able to think about and see the strategic steps you can take to make that happen.
The same applies if you want your company to earn a certain amount of revenue within a particular time. Articulating your dreams would give you a headway to kickstart a strategic financial plan.
2. Understand your current financial reality
After articulating your financial dreams, you now need to ensure they align with your current reality.
Analyze your financial state. Monitor your income and expenses, your assets and liabilities, potential risk factors that could affect your finances and potential finance growth.
Once you know where you stand, then you can create a goal-based financial plan that respects your current financial state and accurately aligns your dreams with your reality. This will ensure you not only have dreams, but also goals that can be achieved within realistic timeframes.
3. Choose a specific niche or field to focus on
For better earnings and brighter financial future, you need to distinguish yourself from your competition. Distinguishing yourself and standing out from the competition starts with choosing a specific professional field or area of specialty and striving to be the best at it.
Select your niche or area of specialty and focus steadfastly on it, improving your skills and serving your clients in the best way possible. This usually pays better (at least in the beginning) than trying your hand in everything, being all over the place and never really excelling in any one thing or niche.
When you specialize and people know you as the expert in a particular niche, they’ll be more confident to turn to you for solutions to their needs. You will also get better at helping them and consequently build your reputation, increasing your client base, client satisfaction and income.
People looking for solutions you offer need to know you are the go-to expert and not someone else. Specializing and being a pro at it can single you out from others and improve your financial state. You’ll even have the clout to charge premium rates for your products and services.
4. Customize to your client's needs
Every client has unique goals and you should turn that into your own interests. Doing so helps to improve your own income generation.
Clients love to see extra effort done to ensure their needs are served flawlessly. It gives them a solid reason to stick with you and become regular customers.
Customize to your clients' needs and provide them solutions that align with their exact requirements. This will change the entire game for you and you’ll get more recommendations and referrals, boosting your earnings.
5. Build a bridge between the present and future
Articulating your dreams and working on your business might not be enough to take your finances to where you want and bring true financial freedom. In this case, you need to build a bridge between what you do and what others can help you do on this journey.
While you focus on the reality of your present and how you want to ensure things work out, you should also simultaneously think about the future and how your decisions today could affect your future.
Unfortunately, many people are more focused on the present only or the future only without building a bridge between both to create a stronger path and means to get where you want.
A major goals for financial planning is to ensure a financially stable future, meaning you can't place the present and the future in two totally different compartments. You need to bridge the two and think about how your resources of today will help you in achieving your goals for tomorrow.
Knowing that will help you manage both ends efficiently. It will also help in the decisions you make, as you constantly bear in mind what you are gradually working towards to achieve in the future. You will be able to make sacrifices because you know what it would eventually yield to.
If you are doing this with the help of a partner or team, reach an agreement with them as necessary on sacrifices and decisions that must be made to help you individually and as a team.
6. Take bold action steps towards your financial dreams
You can plan all you want but if you don’t take steps and act on your plans nothing will happen. Your dreams for a better financial state and financial freedom will remain just that—a dream. You need to be bold enough to walk on the bridge you built connecting your present to your future.
Turn your dreams into reality by taking action and not leaving them as mere dreams. For example, know how much you need to save to meet your financial obligations and for a brighter future, and at what frequency you’ll need to save. Then actually start saving for that brighter future.
Ask yourself strategic questions that help you identify the actions that'll make your dreams come true: "How much do I need to save weekly or monthly?" "By the end of the year, how much should I have saved?" "Do I need to get a side gig to supplement my income or change my job to improve my income?" "How do I intend to overcome this challenge? "What steps should I take next?"
Such questions will help you gain clarity and move in the right direction. Take bold steps in the right direction, while also protecting your current assets and still doing what you need to do daily to ensure you are contributing to your long-term goals.
Living life without being deliberate and strategic often yields nothing, as you would only have dreams that have no clear way of becoming a reality.
7. Prune your client list
Pruning your client list might sound counterintuitive, but it might just be the right move to take your earnings and financial strength to the next level.
Many times, it’s best to focus on quality and not merely quantity of customers and products. Focusing on quality might mean you'll attract and have a few clients that pay you better for the high value and high quality products your offer.
However, you can then continuously improve the quality of the products and services you offor, which in turn will bring more high-paying clients and increase your revenue. This is a strategy worth considering that's used by many of the world’s most successful companies, including Apple Inc.
Spending more time on fewer clients to deliver the highest quality can improve customer loyalty and build a solid reputation for your brand, which will go a long way in improving your finances.
The tips listed here will help you to build a solid financial plan, maximize your earnings long-term, and manage your money better for a brighter financial future. Remember to work on what matters the most to get the best results.
Put in the work and be deliberate about your actions and communications with your partners and team, providing quality service to your clients always.
Also, be creative and look for other means to gain new clients, and review your investment options to ensure they are the right ones for you.
With time, you will steadily move closer to and achieve your financial goals, enabling you to live the life you’ve always wanted and build the kind of business you’ve always dreamed.