Do It Yourself Financial Planning

Personal financial planning is the fundamental process to give direction, stability and growth to your personal finances. It involves the willingness to establish medium and long term financial objectives or goals, with the discipline and commitment to make productive decisions in your work and professional life to achieve these goals. At the same time, it is a financial life project that accompanies you throughout the years and helps you build your financial freedom or independence. Here is a summary of the 9 essential steps to follow in your personal financial structure: Make an honest budget of monthly income and expenses. Implement habits and strategies of increasing and diversifying your income, as well as frugality or limiting non-essential or unproductive spending. The result of the new balanced budget should lead to a minimum savings of 10% of your monthly or annual net income. Define three main financial goals: a short term goal of 3 years, a medium term goal of 10 years and a long term goal of 25 years. Identify your investor profile and risk tolerance levels. Considering your profile, age, financial goals, savings surplus and family responsibilities, request a financial protection or investment plan or proposal to achieve the defined financial goals (it is recommended to consult with a good Financial Advisor). Initiate the plan. Do not defer. Evaluate semi-annually or annually with your investment advisor, the performance of your investment portfolio, considering the performance of the assets, risks assumed, costs of the structure, legal and fiscal regime applicable to your investments. If necessary, make adjustments or changes to your portfolio. It is important the empathy you have with your financial advisor, his understanding towards your financial goals and profitability expectations. Always reinvest your portfolio earnings and also the extraordinary income you receive annually for further financial growth. Be disciplined, diversify and enjoy a rock solid financial future. Follow these steps if you want to improve your financial planning efforts. If you want our team of professionals to take care of it, get in touch here.

Corporate Financial Planning Done Right

Surely on different occasions you have wondered how to organize yourself better at a financial level so that the profit generated by your company is used in the best way. In this article you will discover the key concepts and the basic structure of a good financial planning for your company, which will help you to achieve your business objectives in the short, medium and long term. In addition, at the end of the article you will learn the 3 most common mistakes you should avoid when preparing your financial plan. And all this without technicalities or complications. With a simple language so that you can dedicate your time to do it from today. Financial plan of a company We can define the financial plan of a company as the necessary budget to make the journey you must carry out to reach the destination you have set on the map (strategic plan). In other words, the objective of financial planning is to anticipate and be able to make decisions well in advance before the events we are planning occur. Because you wouldn’t think of planning a trip without knowing your budget and where you want to go, would you? For all these reasons, the financial planning of a company is included in the strategic plan of the business and helps you to make numbers to know what you have to do to achieve the objectives that you have previously proposed. Analysis of the current situation of your business Before you start thinking about money for the future, you have to start from a current starting point. In other words… What is the current financial situation of your company? You need to find out and collect the following data: Income: of any kind, whether from sales, rents, interest on financial products… Anything that comes into cash. Expenses: As well as the income, you must count all the expenses, both fixed and variable that your business has (do not forget the commissions and bank and financial expenses in general). List of assets and their age: Analyze the assets (real estate and movable) that your business has, and write them down along with their age, to know if they are already amortized or still have several years to go. Financing: All the loans, mortgages, renting, leasing… that your business has, including the remaining years, the installment paid for them and the interest of each one. Insurance: Although it may seem unimportant, you should write down the insurances that your business has in force, together with their expiration date and annual premium. The insurances serve to shield your financial planning and the strategic plan of your business, since if the risks of your company are not well covered, they can destroy it. Specify business objectives Once you have a clear starting point, the next thing to think about is where you want to get to. As in a long journey, you are clear about the final goal, but it has different stages. Therefore, during the trip you will have to make stops and you will program the trip based on these intermediate stops until you reach the final destination. In the case of financial planning it is similar, although instead of measuring intermediate goals in kilometers, we measure them in years. Should you want a group of professional planners to take care of your financial planning needs, make sure to reach out here.

Smarter Financial Planning

As global events and the accelerating pace of change put even more pressure on today’s CFOs, finance leaders around the world know they must accelerate their technology transformation if they want to compete and thrive. Having better financial planning today means having a smarter close. A modern close leads to better forecasts To create more accurate plans, as well as more predictive scenario models, planning teams need richer insights. However, it is a reality that broken and manual closure processes get in the way. A traditional close process is hampered by inefficiencies, which obstructs subsequent planning and prevents comprehensive scenario modeling from aiding predictions. For example, a fixed accounting key may be a critical part of the record-to-report process, but it is designed to remove data and dimensionality, robbing you of the information you need to plan predictively. Moving data from one system to another, cumbersome or excessive reconciliations, and repeated summaries conspire to transform valuable accounting data. Analytics, financial planning and accounting (FP&A) teams, as a result, can find themselves at odds, having to make educated guesses or swim upstream to discover the answers. KPMG recently underscored the importance of a modern, digital accounting close by issuing a call to finance leaders to “transform the monthly record-to-report (R2R) close process to align more closely with the organization’s strategic forecasting needs.” The message is clear: to remain relevant and effective, the close process must evolve to become smarter, more efficient and more automated. Establishing a data center is critical to business agility Before overhauling the closing process, companies must lay some important groundwork. Fast and successful transformations of legacy functions require the presence of an intelligent database, a single source of truth for ingesting, enriching and transforming data. This must be finance and connected to the overall system of record. The establishment of a financial data hub provides a consistent way to view all financial, operational and historical data. Real-time, rich dimensional data allows users to better understand business performance, analyze budget versus actual data, and interrogate trends and insights. As changes occur in the data center and in business processes, it is immediately reflected downstream, so accounting and FP&A always operate with the latest information. Once an intelligent data center is up and running, modernizing specific functions (such as the closing process) becomes easier. Simplified variant analysis For a closer look at how smarter closing saves time and improves insight, let’s dive deeper into a use case. Variance analysis is a common and fundamental function in finance, analyzing plan versus actual. Too often, this fundamental task becomes a manual and time-consuming process, limiting the frequency of analysis and calling into question the accuracy of the data for both accounting and FP&A teams. The reasons for this are varied: teams often work from two versions of the truth (in two different systems). FP&A has questions that accounting is not ready to answer and the data needed to identify gaps or activities that caused a variance is often lost during the close process. Spend your time in action Close processes don’t have to be linear, reductive and highly manual. If yours still is, then you are limiting your ability to take full advantage of your cloud-based planning environment. You now have the ability to transform the closing process with automation, real-time visibility and the comprehensive data needed for teams to do their jobs quickly, efficiently and without the confusion that once defined each close. Accounting can close with confidence and FP&A can plan with more predictive forecasting. Take it from the lived experience of someone who knows how an outdated close compares to a modern one, and what it means for finance and FP&A teams.

Financial Planning for the Family

In the field of home economics, family financial planning is very important as it is the first step in achieving our life goals. One of these goals will probably be to achieve financial independence as soon as possible in life in order to be worry-free. In order to be able to plan well for the future, people need to be aware and able to plan accurately: How our income may evolve in the coming years (from work, from other investments, income from other professional activities, etc.). How the family’s expenses will evolve, taking into account life events (studying, getting married, having children, retirement, etc.). Depending on your starting situation, your age and situation in the usual life events of people and your future life goals, everyone should make a different financial planning. And in between, we should be aware of the protection solutions offered by the insurance industry. Insurance, those great misunderstood people of finance (we only think about paying, but not about what we would have to pay in the event of a culpable loss if we were not insured). Financial planning in business and family The concept of family financial planning is very similar to that applied in the business world. In any company it is understood as the process of elaboration of an integral, organized, detailed and personalized financial plan, which guarantees to reach the financial objectives previously determined. And the deadlines, costs and resources necessary to make it possible. Two financial streams to manage In every company or family there are two streams or flows related to money: the flow of income and expenses (what we earn and spend without taking into account the “when”). the flow of receipts and payments (when we have money in our account, when it leaves our account). This is what affects the treasury, i.e. your family “cash”. Note that you can have 100 euros of income but your collection does not occur until the end of the month each month you work. On the other hand, debit cards with cash payment at the end of the month, involve a series of expenses every time you use them. But you don’t see the payment until the finance company bills you at the end of the month. In financial education, it is very important to know and manage the family’s treasury well. That is to say, to know that we have sufficient funds at all times, to take care of the expenses of all type that can come to us. And for that it is important to have a sufficiently comfortable emergency fund. Family financial planning, together with foresight, prioritization of expenses and empowerment of your patrimony, are part of the four “pes” of financial education. Requirements for financial planning In order to plan well for the future evolution of our personal finances, experts recommend following these four phases: Set and prioritize your personal goals pursued. A short-term goal could be to pay for next summer’s vacation (1,500 euros). Another medium-term goal could be to save for a down payment on an apartment. For example, to save 40,000 euros, at a rate of 10,000 euros per year. A long-term goal would be to have 100,000 euros in a pension plan for our retirement (making annual contributions of 3,000 euros). As you can see, in life there are multi-term objectives and the success of our financial planning will depend on knowing how to organize our savings today to meet these objectives, knowing what amounts to allocate to each one, depending on its priority. Drawing up the family budget The third phase of the financial planning process is the preparation of the family budget with its three main sections: income, savings and expenses. Making a correct family financial planning can be arid and you may or may not like it. To help you in this task, there are professional advisors specialized in personal finance and investments (financial wealth advisory). These professionals can help you set your goals based on your age and personal situation (single, married, with children, etc.). And they will help you make the right savings and investment decisions at all times.