We encounter many surprises in life regarding our finances, including medical bills, school fees, vacation dreams, and unexpected car repairs. Often, these surprises make us victims of impulse buying, which threatens our finances.
We all have fallen victim to improper financial planning, but it is never too late to realize the problem and shape the future into what we want it to be.
What is Financial Planning?
Financial planning is a systematic approach to maximizing the existing financial resources through proper management to better achieve one’s objectives. Financial planning helps you track your expenses, income, and investment to manage your finances better.
To better understand financial planning, you need to understand that it is a holistic approach that encompasses many services and does not focus on a single aspect of your finances.
Financial planning has two primary goals:
- Profit maximization
- Maximum wealth generation for shareholders
Walk with me through this journey of understanding why personal financial planning is important.
1. Income Management
It is possible to manage your income through a detailed plan. You can do this by creating a budget so that you don’t have to panic over the money you have.
Financial accounting for streamers is necessary for the internet era, where many people increasingly use content creation sites like YouTube and Twitch.
Content creators generate income through advertising and or through a partnership with brands and companies to produce a certain amount of content within a certain income. Other content creators create income by selling merchandise or asking for donations on sites like Patreon.
Content creators make money depending on the number of traffic they attract to their sites. Today, many people are delving into content creation since the market is growing fast. For instance, it is estimated that 96% of individuals between 13 and 24 watch online content.
You may easily forget the accounting side of things between trying to get your following and trying to make creative content. Accounting for streamers involves the development of a financial plan that considers income and expenses such as equipment, computer software used to edit content, travel expenses, content-related purchases, data storage, and premise expenses.
2. Defining Financial Goals
Part of accounting for streamers involves stating clearly defined financial goals. While you may be interested in creating meaningful content for your clients, remember to write down your financial goals as you start.
With clearly defined financial goals, you are prepared for unforeseen circumstances like an illness or even having to renovate your home without negatively influencing your budget.
3. Measuring the Progress of Your Goals
A major goal of accounting for streamers is to track progress for your financial goals. Once you have your financial plan in place, you can set smart goals for the future.
Ensure that your goals are measurable to determine progress over time. For instance, you can set a goal to contribute a certain amount of money towards a saving account for a period.
Having a well-written financial plan can be helpful in that it allows you to maintain discipline toward the set target, and thus, achieving your financial goals becomes easier.
4. Preparing for Emergencies
Financial planning involves preparing an emergency fund. This fund will enable you to procure funds in an unforeseen situation like an illness or natural disaster.
While a financial plan allows you to have savings, it also allows you to save some investments with high liquidity that can be utilized in times of emergency.
5. Management of Assets and Liabilities
You often find yourself in a dilemma, needing to know what you want and how best to achieve it.
Accounting for streamers considers this and helps you manage your assets and liabilities effectively.
Usually, any asset you own will come with an attached liability. Financial planning allows you to determine the real value attached to your assets. A financial plan guides you on effectively paying for your liabilities, enabling you to own assets that do not become a burden in the future.
6. Better Standards of Living
Accounting for streamers is aimed at creating a financial plan that enables content creators to invest while not compromising the quality of life they live. Social media can be both a positive and negative influencer in the lives of young people. They admire the lives of other content creators, which may push them to live a life they cannot afford.
With a financial plan, you can manage your finances and pay monthly bills and other expenses while living comfortably.
7. Planning for Retirement
Getting an early retirement is everyone’s dream. Unfortunately, many people are left working until the maximum age without a proper financial plan.
Financial planning enables you to save enough money to fund your lifestyle even after retirement. You can achieve this by setting early retirement as a priority goal in your financial plan and saving your money accordingly.
A proper financial plan can help you create a pool of wealth so that you can continue with the standards of living even after retirement.
8. Financial Independence
Financial independence is another goal of financial planning. It has been taught to many children in the form of piggy banking, but when it comes to adults, they find themselves tied to loans and family. These can be barriers to enabling individuals to pursue their dreams.
With a financial plan, you are in complete control of your finances, enabling you to make better financial choices.
These are just a few benefits of financial planning. Making and sticking to a smart financial plan can help you achieve your goals.
Financial planning can also help you plan for emergencies, prepare your children’s future and even plan for early retirement. You are also better positioned to manage your assets and liabilities so they don’t become a burden in the future.
Furthermore, proper financial planning can enable you to plan for your resources so that you can follow your hobbies or other interests without compromising your finances.