Written by Sean Pollock

Wednesday, 18 June 2008 19:14

We make financial decisions every day. And all of those decisions are part of a bigger picture. This bigger picture is called a financial plan and allows one to reach their goals and reach then faster. Did I say goals? Yes, setting financial goals is the first step in making your money work for you efficiently. It sounds like a no-brainer: "You need to set a clear goal if you want to ever reach it". Yet, actually less than 5% of American families have clearly defined goals.

Only you can set your own goals, because you know your values, needs and what works best for you. For example, your goal might be to retire wealthy, get out of debt, send your kids to college, or all of these. You start with defining your goals. Next, identify how much money exactly is needed to achieve those goals. Give yourself a timeframe. You are now ready for a next step: planning how to get there.

Your plan has to include specific steps that you will undertake to reach your goals. For example, if you have a mortgage, you might decide you need to refinance. Or if you are saving for retirement, you might find that a different investment strategy works better for you. Then you would need to rebalance your portfolio. Set milestones, and decide how often you are going to review your plan and track your success.

Having your own financial plan gives you a huge advantage. You can now optimize your financial strategy to achieve your goals faster. If you did not have a plan, you might be wasting your money by overpaying in higher credit card interest, paying more fees and taxes, and accepting a lower payoff from your investments. Now, when you do have a plan, you will put your money back for a good use.

So how exactly do you make a plan? There are many different choices to make. Here is a classic question. What do you do first: pay off debt or invest? There is no universal answer here, but rest assured, there is an answer that would best suit your personal situation. Interest rates are an important factor to answering this question. But it is not the only one. Some of types of debt give you tax advantage. Some don't. Some investments give you tax advantage, too! Should you pay off your debt and avoid wasting money on interest? Or should you keep the debt and benefit from a tax advantage? How will you benefit? The answer comes when you analyze your finances all together.

We at Ameri-Financial are able to give you the power to recognize your goals, and plan how to reach them. Try our online Financial Analyzer for FREE to get yourself a clear picture of where you stand and what you can do to have your money work its fullest today.