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I am completely convinced that effective money management is one of the most important responsibilities we have. Money is not the most important thing in life, but it has an impact on everything else. I only learned how to manage my money effectively later in life, but it wasn’t too late.

Creating a financial plan, in my opinion, is an important step in effective money management. It does not have to be exhaustive or complicated. The plan should outline how you intend to spend your money. If you are a teenager or a young adult, you should consider your values, or what is important to you. What kind of lifestyle do you want? What are the must-haves and desirables?

Without a plan, you will veer off course, making spending decisions that do not align with your values or the lifestyle you desire. A plan provides direction for your financial decisions; you will eventually discover that the life you desire does not just happen; it happens only when you have a plan. To put it another way, you get what you deserve. “It is always easier not to plan than it is to plan,”  That explains why so many people fail to plan.

Your financial strategy can and will evolve. That’s fine; you’re changing, so it’s natural for your plans to shift. Although it is not required, I recommend that you write down your plan. People are more likely to act on something they have written down. So, what should your strategy include? Everyone’s financial plan is unique, but here are some ideas to get you started. Begin where you are now.

  1. What do I have? (List any assets such as cash, real estate, investments, retirement accounts, and so on.)
  2. What is your Net Worth? ((Assets – Liabilities))
  3. How much money do I/we make?
  4. What are my core values? (Belief, family, education, home ownership, travel, and so on.)
  5. What do I desire? (House, spouse, children, security, generosity, and so on.)

The list above is an excellent starting point. Then add amounts, timelines, strategies, and so on. Remember that your financial plan assists you in setting parameters. A road map that will take you from where you are to where you want to go. Not intention, but direction, determines your destination. You do not end up where you intend to, but rather where your path takes you.