How to Create a Personal Wealth Management Plan

No matter if you create your financial plan independently, through an automated robo-advisor or with professional advice from a financial advisor, some basic components must be kept in mind when crafting it.

Begin by conducting an inventory of your current finances, taking an accurate inventory of assets and debts.

Next, set short-term goals such as saving money or paying off debts. Finally, devise a comprehensive investment plan.

Identify Your Goals

Your goals for wealth building may include paying off debt, saving for vacation or retirement savings and investing. Setting these goals will form the basis of your financial plan.

Make sure your goals are specific, measurable, attainable and realistic. Setting vague objectives like “to become richer” would not suffice – for instance saving enough money for tuition for college education of your children can provide concrete outcomes.

Short-term goals should reflect what you expect to accomplish within a year or two, such as paying off credit cards and saving for a car. Long-term goals can focus on your hopes and desires for the future – like purchasing a home with enough income or retiring in comfort.

Create a Budget

Maintaining an accurate picture of your income and expenses is vitally important. Once you know exactly how much is coming in, and going out, then you can plan how to meet your financial goals.

Ascertaining an accurate picture can show ways you can redirect some of your income toward savings or debt reduction. For instance, cutting back on non-essentials such as cable TV subscription or dining out may enable you to save $500 every month.

Set SMART (specific, measurable, achievable, realistic and time-oriented) savings goals. Doing this allows you to track your progress more easily while meeting both short- and long-term financial goals more easily.

Create a Savings Goal

Once you understand your goals, the next step should be constructing a savings plan to meet them. First step should be obtaining an accurate picture of your cash flow using apps, spreadsheets or simply paper.

Establish a timeline for both short- and long-term goals to help determine how much to save each month and which investments may best suit each category – less volatile investments may make sense for shorter goals, while more aggressive strategies should be considered for longer goals in order to grow assets over time.

Create an Investment Goal

Investment can help you reach long-term financial goals such as saving for a major purchase or retiring comfortably in the future.

Goals for investment must be concrete and measurable; these should reflect both your current income and anticipated future income needs.

Attractively structured investment goals should include short, medium, and long-term categories to determine how much of each type should be put towards stocks or bonds and your risk tolerance level.

Create a Retirement Goal

What type of lifestyle would you like in retirement? That will determine the amount of savings needed, along with any debt and savings goals such as paying down credit card debt or saving for a house purchase.

By the time you reach your late 50s, experts recommend saving multiples of your salary in retirement accounts. A calculator can help estimate what it will take for this goal to become reality; having it set as a goal will keep you focused.

Create an Emergency Fund

Financial experts often suggest having enough savings in an emergency fund to cover at least six months worth of expenses, yet saving this much takes time and often leaves people discouraged along the way, leading them to give up and give in.

Without an emergency savings fund, unexpected expenses might lead to debt accumulation. Instead, setting aside even small amounts each week can help build your emergency savings up gradually.

One method of saving for an emergency fund is depositing a set percentage of each paycheck into a savings account or pre-paid debit card offering competitive interest rates.

Create a Spending Goal

Once you have an accurate picture of your budget and income, it’s time to set spending goals for both short-term purchases such as purchasing new computers or TVs and mid-term financial goals such as paying off debt or saving for an emergency fund.

Setting long-term financial goals, like buying a house or retiring comfortably, can also be helpful. Make sure your goals follow a SMART methodology: they must be specific, measurable, attainable and relevant with an expected timeframe for reaching them.

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