With the hype of New Year sales bustling everywhere, it is impossible to resist buying our favorite deals of the season. But before you overspend again, ask yourself, will it bring a burden on your expenses? If the answer is yes, then you have to make some important financial decisions before heading into 2019.
Why is Financial Planning important?
Many of us think of financial planning as a complication and are always reluctant to implement it. In reality, it is just about managing your expenditures in a way so you could make the best out of your income – by either saving, investing or planning for a secure future. Financial Planning offers you a back door to escape bottleneck situations like running over the budget or going broke in extreme cases. From saving money to getting help from investing plans, each step we take we take towards attaining financial stability in upcoming future falls under the label of financial planning.
Keeping all your vows behind, we bring you a list of financial planning advice to not only find new ways to save but also lift your earning prospective in the years to come.
Make a Financial Record Book
Before you start acting on a specific financial plan, it is important to gather all the data. Keep a record of all the money you spend on – bills, taxes, credit cards, grocery or your impulsive shopping. Besides that, make reminders of when to pay your taxes or appointments-to-be with your bank manager or financial planners. A financial record book will help you in the next step of financial planning which is basically tracking your expenditures.
Track and Review your Finances
Once you know where your money goes, do a thorough evaluation of what you spend and overspend. This way you will become more aware of your habits and actions. A proper and regular track and review of all your expenses will help you in pinpointing the areas which need to be cut away from your spending routine.
Create a Monthly Budget
This is an important tip that’ll help you save little from every month’s income. Make a monthly budget, set aside 10-15% amount for your savings, and divide the rest for your other cash outgoings. If you have all the cash allocated for each of your spendings beforehand, then you won’t spend on anything extra.
Stop Using Credit Cards
If you’re bad at saving money, we highly disregard using credit cards. Withdraw your monthly budget amount in cash and use it for paying all your bills and grocery. Try to go all-cash for a month and notice the stark difference. Credit cards are a pitfall for heavy spenders as they easily lure us into spending over our financial limits which causes several problems later on. If you must use cards for payment, go for debit cards instead of credit cards.
Make Short-Term Money Goals
If you plan on getting married or buying a house, start saving at least a year before. Apart from the immense power that short-term Money goals have in sustaining a financial plan, these goals also help in realizing big life dreams. Short-term saving can help you save more instead of saving little for five years!
Live a Life below your Means
To prevent your debts from rocketing up the sky, make a habit of always living below your means. The higher the gap between your income and spending, the higher chances you have of reaching your financial goals. Although this tip may seem demeaning to some extent, living below your means does not mean to stop spending on yourself and your needs at all. It all narrows down to balance and control.
Plan to spend better, not Spending More
Instead of miserably spending over every expensive clothes you see, try to spend on things that you value more. For instance, a weekend trip with friends or a roadside meal with your children. Value your experiences more than materialistic things.
If you get a Raise, raise your Savings too
Try to save money according to a certain percentage so when you get a salary raise, your savings immediately increase too. These savings will only help you have a secure future after your retirements.
If you are someone who likes to have stability in life, a sound financial plan will work as a brick wall for you to lean on when everything around you falls into chaos. Have you got any tips to share? Post them in the comments section below!