Financial planning is something that more people are becoming aware that they need. Part of the problem for many is that nothing seems to be free. While this can be true this article is in response to a reader’s search for financial planning help. We have also included some links to other helpful sites.

Planning Goals,Do It Yourself Financial Plan

There Is Goal Based Financial Planning Help Available

Taking the time to create your own Do It Yourself aka DIY financial plan can be well worth the effort. The problem for most people is that they don’t know where to begin. This article will help you do just that.

Here the Key 6 Steps To Your Do It Yourself Financial Plan:

Step #1 DIY Financial Plan – Set Some Personal Goals

When you take a vacation do you just get in the car and to or do you have some idea of where you are going? Most people spend more time planning their vacation than they do their financial future. Take a sheet of paper out and start writing down some things that you would want to accomplish financially. These need to be your goals not mine or the goals of someone else. Break them down into:

Short term goals – Less than 1 year

Mid term goals  – 1 to 5 years

Long term goals – Longer than 5 years

Near each goal write down a dollar amount that it will take to accomplish this goal. Pick a target date to have the goal accomplished. Place the list somewhere that you will see it on a regular basis. This will help you to stay motivated and to track your progress.

Step #2 DIY Financial Plan – Take A Snapshot Of Your Current Situation

Now before you start moving towards where you want to be you have to determine where you are. This needs to be a realistic assessment of your current situation. Here are some things that you need to look at:

Current Net Worth:  Assets – Current Debt = Net Worth

Ability To Save:  Current Income (Monthly) – Currently Monthly Bills = Discretionary Income. You should look at the bills that you HAVE to pay. This should not include things like eating out, entertainment etc. Those expenditures should happen after you have saved for emergencies, retirement, debt reduction etc.

Step #3 DIY Financial Plan – Practice Risk Management

It is important to protect the things that you can afford to lose and to build an emergency fund over time. An emergency fund should be equal to at least 6 months of your bills that MUST be paid each month. Mortgage, electricity, food, insurance etc are the things that should be calculated in this account. This money can be used to pay bills in the event of a job loss but also for things emergencies like automobile repairs, deductibles on insurance etc. This will allow you to borrow from yourself and then pay yourself back. This is much better than using high interest credit cards. A home equity line of credit is another option but only if you are disciplined to only use it for emergencies.

Risk Management should also include insuring the things that can’t or would be difficult to replace. Here are some of the types of insurance that you should consider carrying.

Life insurance – To pay off debts, pay estate taxes and replace the lost income of the deceased

Disability insurance – If your income went away because of an accident or illness what would you do? Social Security may or may not pay and if it does it can take years to collect. A personal disability policy can be invaluable.

Homeowners insurance – Home replacement could be difficult at best or impossible at worst. Most mortgages will require homeowners insurance. As you build your savings you can increase your deductible.

Auto insurance – Most states require this.

Liability insurance – Make sure that in the event something bad happens and it is deemed to be your fault that you are not left penniless.

Health insurance – This is now required since Healthcare Reform. Regardless you still should carry it. Many high deductible plans are affordable and will allow you to take advantage of a HSA.

Do your homework and purchase these from a reputable mutual company when possible. The cheapest is not always the best.

Step #4 DIY Financial Plan – None Of Us Are Getting Out Of Here Alive, Plan For Your Death

If it is not in writing then you don’t have a will. Simply expressing your wishes verbally will not hold up in court. Things like a durable power of attorney as well as a living will are important. Use a professional.

Step #5 DIY Financial Plan – Plan For Taxes, They Are A Part Of Life

You don’t want to pay too much or pay too little. Getting more than $500 back at the end of the year means you loaned money to Uncle Sam at 0% interest. If you have to pay too much you could be hit with penalties. Get the help of a CPA unless you have a very simple return.

Step #6 DIY Financial Plan – Financial Education

Take the time to learn more about your investment options. Planning for your retirement takes an effort. Financial and retirement planning will not simply happen on its own. There are many resources available. Many employers offer resources to there employees. Ask others who you know have been successful. Still don’t assume any one person or source is correct for your situation. What works for one may not work for another.

This is some basic information to help you get started. Don’t take this article as a replacement for professional help. Your situation may or may not apply to this article.

Disclosure

Huffington Post – Do It Yourself Financial Plan. Should You Go It Alone?

Get Rich Slowly – Take Control Of Your Own Financial Life