Conditions are always changing. This is true even for regular times, and even more so in this day and age.

As far as your money is concerned, there are always some questions that people make themselves. “Where to put my money? Am I setting aside enough each month? How can I lower my expenses?”.

But these can be somewhat tactical and should be part of a bigger picture - a plan, a roadmap for you to follow so you know you are headed in the right direction.

Even if you already know your exact goals that make up your idea of achieving financial freedom, just that may not be enough.

If you have any doubts, let’s see how you can determine if you need a financial plan.

Do you know where your money is going each month?

Goals and objectives are only a part of the equation. That is your target, your finish line. However, you are starting from somewhere, and without knowing where you are, it is close to impossible to go where you want to be.

So the question is: do you know how much you are putting towards your financial future and how much you are spending (and where you are spending it, for that matter)?

It’s one thing to have a vague idea of where money is flowing to. Deciding on that beforehand allows you to spend with purpose. That is where preparation and a simple budget come into play. Did you know that for the average EU citizen, almost a quarter of total expenses are made on housing and utilities?

Every time you make a money decision, it either gets you closer or further away from the life that you want to have. So it’s best to know your options well.

Do you know when you are going to reach your goals?

“Where do you see yourself in 5 years” is a popular question in a job-interviewing context. Although it can seem a bit outdated (after all, many of today’s jobs didn’t even exist 5 years ago), there is something to learn from it.

Namely, it shows whether someone is taking time frames into consideration or if it is mainly a focus on the present.

You may know that you want to go on that dream vacation, or where you want to enjoy your years of retirement. You may even know how much you are contributing each month to make this all come true. But do you know when you will be able to do it at your current pace?

If you don’t, you may have to start thinking about it.

Because while it is true that big journeys are made of small steps, and that every little bit helps in compounding results, time is the one thing you are always running out of.

How different will your dream vacation be in 10, 20 or 30 years? When will you be able to enjoy it the most? And in a world where two-thirds of older people in the EU continue to work for financial reasons, even while receiving a pension, preparing your retirement should begin as soon as possible.

It may even come to the point where a goal loses its meaning if you wait too long to achieve it.

And so, you may have to make adjustments.

Do you know what you are sacrificing?

Money issues are matters of choice.

If you are taking a luxurious 3-day weekend, you won’t be able to invest that money in your future. And if you are buying coffee out everyday, there is potential earnings you are not able to get.

And that is ok - as long as you are aware of it.

Making the best choices on your finances is something that only you are able to evaluate. For you to be able to make those decisions, you have to know what is it that you won’t be able to get.

This is what is known in economics as the “opportunity cost”. Choosing one thing implies giving up on multiple other options. In the end, it’s a matter of knowing what is important to you.

In the end, it can be easier than you think.

It doesn’t need to be complicated

If your answer to these questions was “yes”, congratulations! You don’t need to get a financial plan, because you already have one.

It may seem simple, but at a high-level, you already know where you want to go, by what time and what you are willing to pass out on to get it.

Making it all come together and perfecting it may take some more work, but you are on the right track to achieving your goals.

And that is the secret, in the end. Start simple, make progress and keep improving.

Do you know someone in need of a plan? Share this so they can see how simple it can be!