Six Steps to Personal Financial Planning

Introduction:

1. I need to manage myself before I can manage my money. Before I can plan my finances, I
have to be absolutely honest with myself:
• Honest about the kind of person I am i.e. my attitudes towards, and feelings about, money
• Honest about what I spend my money on i.e. my financial habits, spending patterns

2. I must be willing to reject my current financial situation and accept a new way of managing
my money. I have to change my ways & the course of my life

THERE IS NO FINANCIAL INDEPENDENCE WITHOUT FINANCIAL PLANNING.
Planning will involve six steps:

Step 1: Determine your current financial situation

This step will include:

• Your money problems (no retirement plans, own property etc)
• Your income (eg. too low, not permanent etc)
• Your account, debts & loans
• Your savings, investments and assets(high or low compound interest?)
• Knowledge about my family members in my household. Knowledge about their: employment,
health, financial problems, debts, income, expenditure, contributions to the household.

Step 2: Set short-term, medium-term and long-term goals

Short: eg. start a business, pay off smaller debts
Medium: eg. pay off vehicle, property, start other businesses
Long: eg. invest in stocks, property etc.

Step 3: Draw up a budget (my financial plan).

This is to see whether I have enough money for my future plans
Does the budget/ plan balance? (ie. do I have enough money for my future plans?)

Step 4: If the answer is NO, change my plans (redo Step 2) until I have enough.

Step 5: If the answer is YES, I must take action. Make my plan a reality.

I must go and open a savings account, contact a broker and invest in unit trusts or a retirement annuity, buy a property, start a new business.

Step 6: Revise and update my plans regularly as circumstances change
(eg. arrival of baby, loss of a job or sickness in the family, death)

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