Young couples may find the idea of financial planning intimidating, but a little work and organization now can make the difference between successfully meeting your goals and experiencing a future financial crisis. You can use the services of a financial planning professional or do it yourself.
Sit down with your spouse and list what you want to accomplish in the next year, the next five years, and 10 or more years from now. Be specific. Instead of saying "I want to get a new car one day" clarify your goal to "save $1200 each year toward a new car to be purchased five years from now." Common financial planning goals include saving for a home, paying off student or consumer debt, saving for retirement and assisting children with education expenses.
Financial Data Gathering
Assess where you are in relation to the goals you set, and get an idea of your overall financial picture by gathering all papers and information regarding investments, savings and debt -- including student loans, credit cards and loans from family members. Collect income information and monthly bills. Record the value of large assets such as real estate and vehicles, as well as all life insurance information.
Financial Data Analysis
Calculate your net worth by totaling your assets, then totaling your liabilities, and subtracting liabilities from assets. If the amount seems low, don't worry. Most couples starting out have a low net worth that gradually increases as they pay off debt and build savings and equity in real estate and investments. Knowing your net worth and monitoring your progress as it increases can make all the scrimping and saving you will do worthwhile! Record your monthly income and expenses with an eye to cost-cutting where possible.
Financial Plan Development
Use your net worth as a starting point and your goals as ending points, develop a monthly plan to reach your goals. For example, to reach the goal of saving $1200 by the end of next year plan to save $100 each month. To begin your retirement savings plan to save $50 each month. To pay down your student loans faster increase payments by another $50.00 each month. Young couples should also ensure adequate insurance coverage and wills are completed as part of a full financial plan, as they can minimize the financial impact of an unexpected death.
Financial Plan Implementation
Carrying out the plan is the most difficult and rewarding part of financial planning. Examine your goals and the requirements to reach them. Get creative in finding ways to increase income and reduce debt in order to help you meet the goals of your financial plan. For example, replacing a weekly night at the movies with a free DVD from the library can free up funds for reducing debt or to build savings for that new car. if required, explore moneymaking hobbies or take on a part-time job to increase income and your net worth.
Monitor the Plan
Review your financial plan annually to confirm you are on track to meeting your goals. As life events such as the arrival of children or career changes occur you may want to revise your goals. Make adjustments as necessary to accommodate changing circumstances. A financial plan is a flexible road map to get you to your financial destination, and monitoring your progress will let you know how your journey is progressing.
A former financial adviser with more than a decade of experience in personal finance and small business banking, Sarita Harbour is a professional writer specializing in personal finance, small business, technology, and content marketing techniques. Her writing appears online at sites such as Yahoo! Homes and Bob Vila. Harbour holds a bachelor's degree in psychology and computer science from the University of Guelph and the Personal Financial Planning designation from the Institute of Canadian Bankers.