Being adequately organized is the key to success. A financial roadmap can help you achieve your goals by mapping out your financial and life goals. Once you work on your map, you can track your progress and work towards these goals. Don’t know where to start? The Smartvestments series was created to help you with these things.
What exactly is a financial roadmap?
A financial roadmap is similar to a personal goal list. You can list your financial goals and break down the steps needed to achieve these goals. Financial roadmaps help you stay organized and track your progress as you hit your financial goals. Whether you have short or long-term financial goals, a roadmap can help you better visualize, plant and understand your journey.
Think of a financial roadmap as a destination roadmap. You need to start from where you currently stand (Point A), and decide what your destination is (Point B). To determine how to get from Point A to Point B, you need to first map out your cash flow, your expenses and account for your debts. To reach Point B, break down the steps needed to achieve your realistic financial journey.
If you aren’t one for set plans, don’t stress. You can leave as much space for flexibility as you want. If you get lost during your journey or don’t hit your destination points, you need to make sure you have a backup plan, but a good roadmap will help you account for the challenges or detours in your destination and you can get back on track if any of the expected obstacles arise. You can always go back and reassess your financial goals should your life or priorities change.
The advantages of a financial roadmap
- Helps achieve financial well-being
- Allows you to be more in control
- Reduces stress and anxiety
- Increases your chances of success
- Creates a space for you to rethink decisions and learn from your mistakes
How to create a financial roadmap
Let’s say you’re on board and are excited to plan your financial journey, but you don’t know where to start. The steps below will provide some insight into how it can be done.
- Create your budget
Your budget will include your income and expenses. You need to track your spending over the last few months or so and take unexpected expenses into account as well.
You can use online budgeting apps for this or financial statements. After you determine your income and expenses, see if there are any extravagant or unnecessary expenses you have. Do you need to eat out every day or can you cut back to once a week? Anything non-essential needs to be assessed. After you cut back your expenses, recalculate to allocate a budget for yourself each month.
2. Pay off your debts
Your roadmap should include a debt repayment plan. Check to see what debt you need to pay off — ideally, you want to get to a place of financial freedom. Aim to pay off your debt within a certain period. You can do this by paying off credit cards first and creating an allowance for yourself to pay off other debts within a longer time-frame.
3. Create a plan to reach your destination
Know that with your determined budget (Point A), you also need a plan for your destination (Point B). Like most people, you probably already have a clear picture of what you want to achieve in life, your dreams, and your aspirations. Now you need to create a financial plan where you decide exactly where you want to be and what your goals are.
Goals will be different depending on the person, as everyone has different aspirations. That’s why personalizing your roadmap to fit your own lifestyle and ambitions is the best way to go about it.
4. Consider investment options
Along with reducing your expenses, allocating your money more wisely will help you save significant amounts in the long term and reach your goals a bit faster. Investing is basically taking some risks for a higher financial reward.
Cryptocurrencies are the most popular thing to invest in nowadays and that’s for a good reason. Investing in crypto is accessible to everyone, there’s no wealth gap to hold you back and it also empowers you to decide how much you want to invest, depending on your own financial situation.
So consider adding investments to your roadmap as a better long-term solution to secure your future.
5. Add your safety net
A safety net in your financial roadmap is a protection plan should unexpected events occur. If your financial journey and goals change at any time, your protection plan can help you stay on track or protect your assets and investments. Your safety net can include savings accounts, life insurance, an estate plan, and property insurance. Readjust your goals should unforeseen circumstances arise and recalculate your budget to stay on track.
6. Occasionally review your roadmap
Review your financial plan annually to assess your financial situation and the progress you are making. A financial advisor can help you out here, if you’re not too sure of yourself yet. Reviews help you hold yourself accountable. With an annual review, you can determine if you need to make changes to your roadmap or your budget to hit your goals.
After mapping out your journey, you’re on your way to reaching a desired financial destination. It’s important to stay consistent with good financial habits and hold yourself accountable to reach these goals. While planning is essential, life can sometimes happen, but with a financial roadmap, you’ll be better equipped to deal with unforeseen circumstances and adjust your goals accordingly.
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Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
