Why Is It Important To Have An Annual Financial Plan?
Financial Planning is important to keep a tab on your incomes and expenses and to determine if you are going in the right direction with respect to your investments and savings. But many strategic planners also sometimes fail to understand the importance of an annual financial plan. This article will focus on what an annual financial plan is and why is it important.
What is an annual financial plan?
Every New Year comes with new challenges and new opportunities. Your kids go to one higher grade every year, expecting to add new expenses every year, like the growing school fees, transportation, extracurricular activities etc. An annual plan is a way to plan out your income and expenses according to the events happening in that year. You can consider the fixed or sure incomes against the sure expenses, like the school fees that you have to pay for the whole year. Apart from that, you can plan how much you are hoping to save this year, and what methods are you planning to use to achieve those savings. The components of the annual plan can usually stay the same unless there are any major changes like a new family member. By doing the annual plan every year you can see how much you were able to save against what you had planned and if there are any changes required.
Life Events: Life events have a major impact on your annual financial plan. Like getting married, having a new baby can add up to your expenses. Getting a better job or a promotion can add up to your income and can also have a positive impact on the annual plan. You can make changes in your annual plan according to these life events, most of the times you can start planning your financial changes in advance. Like you can save for your wedding or buying a new car well in advance and also make it part of your annual plan.
Investments and Savings: The annual plan can also help you see how much you are progressing with respect to your investments and savings. You can do some long-term investments and every year the annual savings plan can show you how much you were able to save. You can also do some savings with the help of automated robots like Bitcoin Trader that are good at showing how the market trends work. An annual plan can also help you to achieve your aimed retirement savings which otherwise can be neglected easily.