In general usage, a financial plan is a comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans.
This often includes a budget which organizes an individual's finances and sometimes includes a series of steps or specific goals for spending and saving in the future. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings.
A financial plan is sometimes referred to as an investment plan, but in personal finance a financial plan can focus on other specific areas such as risk management, estates, college, or retirement.
In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan.
Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department.
A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.
A financial plan may be contain prospective financial statements which are similar, but different, than a budget.
Financial plans are the ENTIRE financial accounting overview of a company. Complete financial plans contain all periods and transaction types.
Its a combination of the financial statements which independently only reflect a past, present, or future state of the company.
Financial plans are the collection of the historical, present, and future financial statements; for example, a (historical & present) costly expense from an operational issue is normally presented prior to the issuance of the prospective financial statements which propose a solution to said operational issue.
Applied to an individual, a financial plan revolves around the person's income and expenditure and it is the management of this plan that helps one to become wealthy.
Personal budgeting is the way to go towards maintaining a healthy financial plan
Original Article: Financial Plan
9 Wealth-Building Lessons From Billionaires
By Mark Ford
There is no shortage of billionaires today. In 1985, there were fewer than 20 of them. Today, there are more than 1,800. As many as 536 of them are American. That’s nothing to sneeze at. Nor is their collective net worth of around $2.5 trillion.
At the moment, the U.S. has the world’s largest and most-profitable economy. But, India and China are catching up. Their economies are growing fast. And they are not wasting trillions of dollars on foreign wars.
One of the best ways you can create and maintain wealth is by following the lead of people who’ve already done so.
About 33% of the very rich got their money through inheritance.
Take the Waltons (founders of Wal-Mart), for instance. The rest — two out of three — created their wealth through business.
About half of those mega-entrepreneurs started with family money, and the other half started from scratch.
These are the people — like Bill Gates, Warren Buffett, Sergey Brin, and Larry Page — who earned the wealth they have. These are the people I’d listen to if I wanted advice on how to succeed today.
I don’t know any of these billionaire entrepreneurs (BEs) personally, but I do know lots of multimillionaires — entrepreneurs, authors, professionals, and even a few successful artists. And in my experience, they share the following traits with billionaires:
1. Most, but not all, have college degrees.
The great majority of BEs — about 90% — have college degrees. But it’s not necessary for success.
Among the world’s super-rich today, Bill Gates, the late Steve Jobs, Fred DeLuca, David Geffen, and Andrey Melnichenko didn’t graduate from college.
And David Murdock (Dole Foods) and Richard Desmond (British publishing magnate) never finished high school.
That same percentage (90%) feels roughly true in terms of the most successful people I know.
Those who lacked college educations were plenty smart and had the most important skills: thinking, writing, and speaking.
2. BEs work harder and longer than the people who work for them.
Most say they work 50-55 hours per week. Canadian communication mogul Ted Rogers worked 12 hours per day. And some, like Bill Gates (when he worked at Microsoft) and Jeff Skoll (dot-com legend and eBay’s first president) took no vacations for years while their businesses were growing. These days, I probably work about 60 hours per week, but when I was in my “growth” phase, I was working 80-plus hours and not taking vacations.
Every successful person I know works long and works hard.
But, I do know a few people who seem to be able to have some balance in their lives.
Bill Bonner, for example, has always kept his weekends free for building stone walls or repairing roofs on his various global mansions. But he works 16 hours per day
3. BEs are constantly looking for profit opportunities.
When they hear about an economic or business development, they don’t hear it as some bit of abstract news about someone else. Instead, they think, “How could I profit from that?”
In this respect, you’d have to say BEs are self-centered.through Friday.
Like all super-successful people, they are constantly relating the facts of their lives back to their personal careers.
I can’t get through a magazine, any magazine — even one about architecture or science — without having these sorts of personal profit questions pop into my mind.
4. BEs don’t dwell on mistakes.
They view problems as learning opportunities. “I don’t remember any mistakes,” late pharmaceutical billionaire James Sorenson told Forbes, “only opportunities to overcome problems.” I know some successful people who DO dwell on mistakes — mistakes made by other people.
Usually, people who work for them. But, these same people are quick to forgive themselves.
I used to beat myself up over mistakes, but I eventually got over them.
I realized it’s not about having a perfect batting average... it’s about how many times you get up to the plate.
5. BEs think neither completely positively nor negatively, but strategically.
Instead of thinking, “That’s impossible,” or “I can do anything,” they think, “Is that possible?” and “If it is, how could I do it?” This is a big point.
Most people, when they hear a new idea, think immediately about all the problems it might cause, or how difficult it might be to implement, or what obstacles one might have to overcome. When I see smart businesspeople doing this, I think to myself, “These people will never get beyond a certain point. They are limited by these instinctively negative mindsets.”
When someone suggests an idea to me, I try to shut down the critical part of my mind and listen to the potential of the idea.
If my positive mind likes the potential, then I allow the critical part of my brain to raise questions and concerns. I then use both sides of my brain to come up with answers and solutions.
6. BEs don’t believe in luck.
In a recent Forbes poll of the 400 richest people in the world, none said they had become wealthy entirely by luck. Some said they considered luck to be a minor factor. Most, like Oprah Winfrey, consider luck an outsider’s way of describing someone who works hard and seizes opportunity. “Luck,” Winfrey says, “is preparation meeting a moment of opportunity.”
7. BEs are not driven primarily by money.
“Studies show the desire for financial success is no stronger among entrepreneurs than among those not starting a company,” says entrepreneur expert Kelly Shaver. Wharton School management professor Raphael Amit agrees: “No one is saying they don’t like their wealth. What matters more is the innovation, the intense commitment they have to an idea, and the difference it can make. Money is a byproduct.” I find this to be 100% true.
BEs are motivated primarily by challenge. They want to prove something — all kinds of things. They want to prove they are smart and their ideas are good and their critics are wrong. They want to show the world there is a place for better products and better services and things done the way they believe they should be done. These are their primary motivators.But, don’t fool yourself. The BE wants to get paid. He wants every dollar he’s entitled to. If you try to deny him that money, you will lose him.
8. BEs make friends. Business is never about money.
Business is about people. It’s about who you know and who you trust. Billionaires work within their circles to get things done.
9. BEs know they can’t do anything alone.
Instead, they create important partnerships, and work with these partners to collaborate on great projects. Most importantly, they remember to give credit where it’s due. If you want to survive and prosper in the 21st century, emulate the habits of the world’s richest people.
Educate yourself about money. Make conservative investments. And seize opportunities to start and/or invest in entrepreneurial businesses.
About the Author: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.
What One Woman Learned From Declaring Bankruptcy After Taking On $20,000 Of Debt
For Tennille Flowers, walking into bankruptcy court was one of the scariest moments of her life.
Flowers, a 36-year-old stay-at-home mom of two living in Michigan, filed for Chapter 7 bankruptcy in 2008 to alleviate about $20,000 worth of debt.
Her debt, not counting the $12,000 of federal student loans that wouldn't be eliminated by the proceedings, included about $15,000 of medical debt from an emergency appendectomy and about $6,000 of credit card debt she'd accumulated after going through a major car accident that left her without a way to get to work or pay her bills.
"My accounts were in collections by the time I filed," Flowers says. She was getting calls from debt collectors, some of whom were resorting to intimidation.
"That's pretty scary, having someone on the other end of the phone yelling at you in a situation where you feel like there's nothing you can do, and you're trying your best and it's not enough," she says. "A couple times they brought me to tears. That entire period of time, you feel like you're walking on needles because you're emotionally frazzled."
However, choosing to file for bankruptcy was a difficult decision.
"I was raised in a family where you borrow money, you pay your debts, and that's the way it is," she says. "I had this moment of, 'You know, it's not going to be the end of the world if I do this, and I'll never do this again.' I felt like I didn't have any other choice. It was a long decision coming, but when I finally did decide to file, it was a relief."
Flowers decided to file for Chapter 7 bankruptcy, which would eliminate all but her student debt, rather than setting up a payment plan through Chapter 13. She was without an income by the time she filed, having moved home to help her mother recover from a surgery and illness and to care for her younger brother and three younger foster brothers.
She used some savings and a tax refund to pay about $850 for the service of a lawyer and court fees in April of 2008, and in September, she went and saw a judge to finalize the proceedings. About six weeks later, she got a letter in the mail releasing her from her former debts.
"It's a scary situation when you're in it and going through it, but in the end, it's not as bad as you build it up in your mind to be," Flowers reflects. "The process was more straightforward and wasn't as scary as I thought it would be."
Today, Flowers is married and stays home with her two young sons, running her blog, Two Kids and a Budget. She and her husband, a factory worker in the auto industry, have a collective $24,500 of debt remaining between his premarital consumer debt and student loans and her student loans. They've paid nearly $15,000 so far, and are on track to pay the rest off by the summer of 2019.
Her credit score has recovered from the bankruptcy and is now in the mid-700s, although she says that her poor credit score after filing didn't dissuade credit card companies from sending her offers (which she declined). She and her husband still use credit cards, although they never charge anything they don't have the money to pay for immediately, and don't carry a balance.
Looking back on her experience, Flowers emphasizes that it's important to research your options and make a game plan before filing for bankruptcy. "You have to know that you're not going to make those same mistakes again, because if you do, you're going to wind up right back where you were," she says. "Once you make the decision to do it, you have to be ok with it and work hard. A lot of people have been through bankruptcy because of what happened in 2008, but that doesn't mean you go into it thinking you can just have a bankruptcy because everyone is doing it. It's not a get out of jail free card."
10 Reasons Why You Will Never Become Rich
The saying is three generations, tops: one to make it, one to spend it, and the third to blow it.
Of course, there are exceptions to this rule, but have you ever sat down and seriously thought about wealth and what it means to you?
Or do you figure, “What the heck, I’ve always been broke, my forefathers were broke; it’s generational” – it’s just a rite of passage of sorts.
If you feel that wealth is out of your reach, you aren’t alone.
According to some experts, there are millions of ‘clueless potential millionaires’ who could be at the top of the wealth ladder if they only reined in a few bad habits.
However, you may be a skeptic, and rightly so.
Being wealthy means different things to different people. But according to the experts, there are financial mistakes many people make that keep them away from their possible wealth.
In fact, a scanty 7% of people surveyed associate wealth with material possessions like cars, houses and boats.
Rather, to many, being rich means having just enough to not worry about the next payday – that’s according to 33% of those questioned.
An additional 26% define being wealthy, or rich, as having more than enough money to quit their jobs.
Still, few people place an actual dollar amount on what it means to be wealthy.
Only 17% felt that being rich means having at least $1 million or more, and 11% stated a six-figure yearly income would make them feel rich.
Yet most people who are rich don’t even consider themselves rich.
Maybe it’s because being ‘rich’ or ‘wealthy’ has very little to do with material possessions, and more to do with how people feel about themselves.
Nonetheless, according to financial experts you will never be rich if you are bogged down by anything on the following list:
According to a survey, of the 52% of people who habitually overspend, many balance the shortfall by taking from their savings, and 22% rely on credit cards.
Blowing all your money each month is not a realistic pathway to wealth.
Start tracking where your money goes each month, check where you can cut back, and create a ‘realistic’ budget that allows you to pay your bills and invest in a retirement account or an emergency fund.
Saving should become a priority if you want to accumulate wealth. Start with an emergency fund.
Once your emergency fund is substantial, you can redirect small amounts toward other goals like purchasing a home or paying for college.
This alone will solidify your excuses for overspending and not saving.
As the saying goes, “Those who fail to plan, plan to fail.”
Putting together a financial plan may seem tedious, but it doesn’t have to be, and you can get used to it.
Life is tricky, and not having some type of safety net can turn a comfortable situation into a disaster.
Even if you have debt, a small income, or many expenses, you can save something, even if it’s only a small amount.
Have you uttered any of these statements before, or perhaps all of them?
Old habits die hard; however, as long as you do nothing to change, nothing will change.
Stop complaining and making excuses.
Instead, take responsibility for your non-productive habits and concentrate on how to change them – and then do it!
Nonetheless, eventually it has to be done.
The problem is that impulsive and unregulated spending leads to debt… period!
Do yourself a big favor: Get rid of the ‘buy now, worry later’ attitude, and switch to a ‘save now, get rich later’ way of thinking.
But that’s not a strategy to live by, or for getting rich.
Putting all your money in one place is not advised because it puts you at too much risk.
Your investment portfolio should include multiple investments with varied levels of risk and ROI potential and liquidity.
Maybe you will get lucky and land a fantastic job, receive a big pay raise, inherit money, hit the lottery, or whatever! But ‘whatever’ won’t cut it if you really want to become rich.
Yes, life is uncertain. No one knows what will, or will not, actually happen; therefore, why not focus on what you can control today?
Get it together now and save yourself, in case someone or something else won’t.
One thing you can be sure of: You are already rich.
Think about it. If someone came to you and offered you a million dollars for your arm, would you give it up?
Why not, you have two; you can surely spare one of them!
Of course the answer would be no!
Being rich is more than physical ownership; it’s a state of happiness and well-being, while wishing the same for others.
So while you are working on getting rich materially, remember to be happy along the way!
It is quite true that the rich mind thinks differently. They have a much different way of thinking from the so-called middleclass and the poor person’s mind. We have already taken a glimpse into that.
The rich person’s mind thinks more about providing quality than about earning their own profit.
They think about how their products benefit society.
This is what makes people believe in what they give and buy those things.
Making people buy their product is one of the least things in the rich person’s mind.
There are other traits that typify the rich person’s mind.
One of these is the leadership qualities that they have.
Look around – all rich men and women of the world today are leaders in some way or the other. Most of them are heads of state or hold some other such position of power. A lot of them are businessmen and businesswomen who command about a hundred people each day. Several of them are celebrities in the world of movies and sport; even these people are leaders in their own right because they rule the world to which they belong.
The other quality is charisma. Without that, richness does not befit a person. The person must be able to carry his or her richness. They must be able to exude the confidence from being rich. They need to have a positive attitude. What is the purpose of being rich if you are worried about your finances anyway?
Rich people also think about benevolence and charity. Every person that is rich is involved with a lot of different causes; most of them have set up NGOs and other such organizations to benefit the masses. This shows their social streak.
After all, all rich men and women arise from an innate desire to do good for the society, whether that is through their commercial products or through their charitable deeds.
To be a rich person, you need to begin thinking like one. This is where you have to begin changing your personality.
Read biographies of the top rich people of the world (http://en.wikipedia.org/wiki/List_of_billionaires_%282009%29) and see what you can take from this study.
The aim of all labour is to be financially able. Thus financial ability and capability determine the wealth of an individual. Being wealthy is not a sin and infact is an aid to living the life that is able to listen and hear other cries. It is such an enigma that men struggle all through their lives to understand it and yet only very few are able to comprehend it and really keep it.
Do you really wish to be wealthy?
Here we shall be discussing issues concerning wealth, so keep glued to this post.
Profit is a reward for satisfying the desires of others. The more you satisfy those desires, the more you will profit." - Harry Browne
THE RULES OF WEALTH
Now you have embarked on a new journey, a new direction, it might worth keeping it under your hat. There may be a time when you will need to discuss what you are doing with your Money Mentors but for the moment don’t broadcast what you are doing. There are so many reasons other people’s opinions can often be negative and this can put you off if everyone is doing it, there may be less room for you there’s no need to give away all your best ideas having other people discussing your business amongst themselves is never good for you. You don’t want to be seen as preaching or trying to convert people to your way of thinking
No one else really wants to know what you are up to – if they ask how you are, reply with a simple “Fine” rather than a lengthy explanation of what you are doing
It’s nice having a secret – gives you a warm, smug, glowing feeling
If you go round broadcasting what you’re doing, there will be people around you who will get jealous and will do pretty well anything to put you off.
Keeping it under your hat doesn’t cost you anything or require you to do anything.
The interesting bit is that even if you did go telling everyone, they are very unlikely to do anything about it.
Most people would rather watch television than drag themselves out of their pit of poverty.
People really hate to be preached to, lectured to, encouraged to think about their lifestyle or told what they are doing isn’t good enough.
Gaining prosperity is one of those things you do privately, clandestinely, surreptitiously, it is best done alone.
RULE 5: MOST PEOPLE ARE TOO LAZY TO BE WEALTHY
Which of these do you think would happen to you? Win the jackpot in a lottery? Get sudden inheritance from a long lost relative and become rich overnight? Suddenly find fame and fortune where you sought none?
If you want to be wealthy, you have to get up early, work hard all day and go to bed still working on your objectives. MONEY DOES NOT GROW ON TREES.
Most people are too lazy to be rich, they may say they want to be, but they don’t. they make half hearted gestures at wanting to be wealthy but they aren’t prepared to put in the work. They aren’t prepared to make sacrifices, study, learn, work their socks off, put in the effort and make it a determined and concentrated focus of their lives.
Most people don’t want to do the work. Yes they want the money but only if it comes to them by “dash’ or accident or by luck or by chance because then it is not tainted with sweat and work and passion and focus.
If you look at anyone rich enough to be a role model – Bill Gates, Warren Buffet, Alan Sugar, Aliko Dangote – you’ll notice one thing in common – they work their socks off. They do more in a day than most of us do in a month
The wonderful thing about wealth is that it’s lying around waiting to be claimed and those who claim it are those who are willing to work for it – wake up early, work hard and put in the hours.
I need to have a team of hardworking, dedicated, focused, ambitious, driven money makers with a sense of fun of course
Oh, and did I mention he’s a millionaire?
“There are two ways to become a millionaire. You either make a lot of money or be a frugal person,” says Nainan. “I’ve kind of combined those.”
In fact the 32-year-old has managed to save a whopping $1.6 million nest egg despite quitting his day job as a software developer five years ago to pursue stand-up comedy. He says what began as a hobby now earns him tens of thousands of dollars per appearance — money that mostly goes to savings.
“In my business, you never know when the phone will stop ringing. There are so many entertainers who are more successful and famous than I am, but they end up poor because they throw all that money away,” he says. “It’s very important to save for my retirement.”
More of Nainan’s frugal habits:
Pay Little to Travel
Even if he gets a generous travel stipend, Nainan keeps his journeys cheap. “I took a $1 bus to Boston for a show I was paid $10,000 to do. I use Couchsurfing.com and AirBnB.com to stay for $60 a night or even free. Instead of taking a car to the airport, I take the AirTrain. A 10-ride ticket is only $25. ”
Respect Your Roots
“I’m half Indian and half Japanese. Both cultures are extremely, extremely frugal. Indians are especially known for being unbelievable tightwads. I guess it’s in my blood.”
Never Buy New
A self-described “gadget freak,” Nainan shops for electronics on eBay, often scoring items for one-fifth their price, and frequents the library for the latest best-seller and even language-lesson CDs. “I don’t buy new furniture. That’s for suckers. There are many people who put stuff on Craigslist, and then as their moving day approaches, they get desperate and give it away for free. That’s how I got…a bedroom full of furniture,” he says.
Do as the Millionaire Next Door
His million-dollar lifestyle may seem counterintuitive, but it’s pretty much by the book as described in Thomas Stanley’s best-seller, The Millionaire Next Door. After all, being frugal pays. Nainan spends no more than $10 on haircuts and $15 on dress shirts. And those run-down sunglasses? He’s had them for five years and counting.
Another way he saves? Nainan refuses to buy gifts for family and friends. “I’ve trained my friends and family for years not to expect anything from me and, more importantly, not to give me anything. There isn’t really anything I need. I live pretty simply.”