Financial Planning Can Be As Easy As Counting

The concept of financial planning can be overwhelming for someone fresh out of school who never did quite well with math. The truth is, financial planning is not restricted to the number-loving elite. As long as you stick to the basics, it can be as easy as 1, 2, 3.

First rule would be to establish realistic goals. Your targets may be short-term, medium-term, or long-term. The ones you would like to attain in less than five years are short-term. They could be furniture for your household, a brand new car, or your romantic honeymoon. Spending money on your child’s tuition fees is medium-term, while retirement-related objectives like traveling are considered long-term.

Next rule is on handling expenses. Simply put, this is about budgeting. Budgeting is not synonymous to self-deprivation. It’s simply exercising discipline in not spending more than what you earn. More savings will help make your goals closer to your hands. Steering clear of debts is also an element of budgeting. Credit cards are probably the deadliest temptations. Their harmless plastic forms that fit our wallets nicely makes us forget that its still money that we are dealing with and losing with every swipe. Making use of credit cards and not being able to pay them on time causes us to end up paying more than the original fees. Utilising cash makes us more mindful of spending.

The third rule is about saving. Putting away at least ten percent of your regular monthly salary is an excellent start. Saving success are results of budgeting efforts too. You can save much more if you budget well. There are also cost savings programs at your place of work where money is automatically reduced from your payroll check so as you would no longer be tempted to spend it. Personal savings are important for emergency expenses, and they become the source of capital for your goals.

The final rule is investing. You could make your money grow! Making an investment comes in different forms. You can invest by setting up a business enterprise, depositing money in the bank and allowing it to grow over time, studying about stocks and bonds, or looking at real estate.

Financial planning is effortless if we look at it this way. You don’t need an accounting degree to write down goals, budget, save, and invest. If things get challenging along the way, you can always seek advice from financial advisers to make details easier for you.

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