When I was a kid, my parents used to bring me sweet New Year's gifts from work. My friends would dispose of them within two or three days. My goal was to stretch the candy delight to the end of the winter vacations.

After opening the box, all the sweets were carefully counted and distributed by day. I ate exactly as much candy per day as I measured out. People around me laughed at me, but only as long as their candy didn't run out.

I have carried my love of planning through life. Today, instead of candy, it's real money, which I manage responsibly and meticulously. Making a financial plan for the year has become a good New Year's tradition.

Contrary to popular belief, financial planning is an interesting and fascinating process. In addition to its organizational function, it has a powerful motivational component.

It is one thing when you dream about something abstract, lying on the couch, and quite another - when you make concrete steps toward the goal. Financial constraints in this case are not perceived as a sacrifice, but as a compromise, as a result of which you remain a winner.

Stages of financial planning

Setting Goals

The first thing to do is to decide on your desires and formulate them correctly. 50% of your success depends on it. Think about what material goals you want to realize in the next year, and write them down in a notebook.

Make sure that each goal is specific, achievable, limited in time and measurable in monetary terms.

There can be more - it all depends on your capabilities. At the beginning it is difficult to determine how many goals you will eventually be able to accomplish. In the end, the most important ones take priority.

Analysis of the current financial situation

Now you need to carefully analyze your expenses and income. If you are used to keeping financial records, there should be no problems with this point. Take the statistics for the past 4-6 months and record the averages for each source of income and each category of expenses.

Optimize Spending

Take a look at your expenses and highlight those that can be cut. If, for example, you eat lunch at a coffee shop every day, start cooking at home and taking food to work with you. Switch from cabs to the subway or bus. Move Friday night gatherings with friends from the restaurant to someone's home.

At first glance, these seem like little things that don't have a big impact on your budget. But when they overlap, they become a real black hole, where the lion's share of income goes.

Finding Additional Sources of Income

Fixing the holes in the budget is half the battle. You still need to try to fill your budget from additional sources. Think about how you can increase your income now.

Ask your employer to give you an extra job. For a fee, of course. In many firms, management encourages the desire of employees to work more. This option is suitable for those who have enough free time and energy.

If you have a unique talent or in-demand knowledge, try to capitalize on it. Good at drawing? Start painting portraits on demand. Have a good command of a foreign language? Get a job tutoring or translating. Are you a competent and interesting writer? Sign up on the copywriting exchange.

Developing a strategy to achieve your goals

After you optimize your expenses and income you will need to link them with your goals. Each one has a specific deadline. By that deadline, the right amount of money should be available.

To do this, you'll need to develop a strategy that includes savings and investments. This is the most interesting part of financial planning.

This is what we will call your target amount. To calculate your target amount, divide the total cost of all your goals by the number of months left to reach them. So, if you want to buy a $1,000 iPhone XS in four months, your monthly goal should be $250. Now you have a specific plan with specific deadlines and amounts. All that remains is to find a way to make it happen.