Financial plan
One of the essential habits in terms of personal finances is to keep an updated Financial Plan, which works as a tool to make decisions and achieve financial goals. However, having an orderly and balanced economic life is a goal that cannot be achieved overnight. Therefore, it is necessary to carry out different strategies to prioritize our expenses and get the most out of our income to achieve our goals.
We want to help you achieve your goals more quickly. Therefore, we will show you some tips to establish an effective financial plan that suits your needs.
1. UNDERSTAND THE BUSINESS:
You have to become a little expert in the sector in which you want to work. Even if it is a very technical sector, it is desirable to learn a minimum knowledge to understand the business. It will make us contrast and understand all the information that we handle in planning. The objective is to avoid parts of the project that are a black box that can only be interpreted by the business manager or by a technician in an area.
2. USE COMMON SENSE:
It is widespread to leave common sense out of the spreadsheet that we are creating. Let’s take the basic assumptions of the model using common sense. Then, let’s look for the arguments that we would use if someone were to refute those hypotheses to test them and see if they are solid arguments or not. As we move forward in modeling, let us look back from time to time and be critical of what we are doing. It is usual to take starting hypotheses that are difficult to defend or distort the initial beliefs when entering the modeling exercise.
3. CLEARLY DEFINE THE PARAMETERS OR VARIABLES:
4. GETTING AHEAD OF EXTERNAL FACTORS:
You must bear in mind that the project will be affected by multiple external factors (economic crises, financial reforms, interests) that can deviate the financial path you have marked from the beginning, so you must work on many future solutions.
5. ESTABLISH THE TIMES IN WHICH YOU NEED TO USE YOUR MONEY:
When you know how your money moves and you have short and long-term goals, you can identify key moments within your financial plan. For example, it is essential that you recognize the month in which you have to pay taxes, rent, buy the SOAT, among others. Then, thanks to the budgets you allocated and the plan you made, you can anticipate the times when you will spend the most money to cover those periodic payments. Also, it is essential that you know when you will need to use part or all of your savings to schedule yourself and have the amount of money you need.
6. MONITORING, CONTROL, AND RISK MANAGEMENT:
Financial planning requires, in an essential way, the monitoring of indicators that allow constant monitoring of the progress of the proposed objectives. In addition, it will enable the control and management of risks external to the company, which may deviate us from meeting the proposed goals. You can determine an example of risk by changing the company’s goals and fluctuations in the price of an input, whose value depends on an international market. You can resolve many of these risks. If it is not possible to do so, evaluate the impact produced on the company, and with this, take actions that make it possible for us to minimize or eradicate them.