“Yesterday is a Past, Tomorrow is the future, but today is a gift”
Financial Planning is not fun to do task and requires a lot of hard work put into it. Managing expenses, preparing for investing in the future, handling the savings are some of the tasks around which Financial Planning is overall centred. The most underrated yet effective advice which I will give anyone is to “Start early, and start giving your best from today”. I know many of my friends, colleagues who promise to manage their expenses but there is yet nothing done to manage their savings and expenditures. There is always an excuse for failure but guess what if you need to make excuses, then it’s already too late.
People make investment complicated, most of the money which is made in any successful investment is made early. Investing or saving early always helps because then you are aware of what you will be getting in due course of time with x amount of money that you invented for x years. For instance, if you are having $1 with you and decide to put it in a bank under interest then it will come out to be $20 after 40 years which is a relatively far deal as and when compared to keeping that $1 in your pocket. If you will invest money for the due course of time then only the chances of growing money are certain else it’s just a 50/50 situation favouring luck.
Let’s talk about some other underrated Financial Planning bits of advice,
- What you earn matters, a lot. I have seen on many blogs and websites which talk about budgeting, saving, getting rid of debts, etc. The main focus and effort should be instead towards giving your effort in increasing your income as a whole because even if you keep limiting yourself, and keep on savings there will be still nothing left to save.
- I have seen many people talk about, Earning more sucks the life out of you. Everyone around me says you should be happy with what you have, because if your income is increasing sorely, then your expenses will also be increasing at an alarming rate. This is not the case, if you are earning a 6 figure salary bracket then you should be limiting yourself and keeping your expenses under the limit. It’s not always the case that if your income is increasing your expenses will also be increased. You just need a better Financial plan.
- Health insurance and emergency funds need to be addressed before you start planning your investments.
- Paying yourself First, if you are someone who lives upon 90-100 percent of income then you should probably start saving for yourself first. Paying yourself first just means that you are keeping 10-15 percent of your income with yourself as savings so that with time you have proper savings for your future which is invested to make your money grow. The time you get your income in your bank accounts, transfer a little portion of that in some other bank account or invest it in stocks. Paying yourself first always helps at that time when you are in need of emergency revenue and your income can’t compensate for the emergency need.
Spend what’s left after saving, rather than save what’s left after spending.
It’s a pretty basic approach on how to manage your expenses and savings at the same time. We as income generators tend to often first spend the income on our daily and monthly expenses and then we do savings with whatever is left. This approach is wrong, you should instead first take out a small sharing of your income for the future and then do the spendings for later use.
Time plays a major role.
There is no excuse for starting late, you should be ready to save and invest at the earliest time possible. Financial Planning plays the best card when you are starting early and you need to know what your needs and not your wants, which you can drop out to lower down the expenses.
Never take a loan that you can’t afford.
Unless you are investing it upon yourself and it can help bring out the best of you, increasing your abilities to an extent that makes sure that you can repay the loan later.
Does it sound weird when you discover that Financial Planning is easy?
Well to be precise, yes it is.
Planning your finances involves nothing much other than limiting your expenses to be as minimum as possible so that you establish a financially stable future. The most important still pertains to starting early and achieving the financial goal early. Above given were some of the pieces of advice which you can follow to make a good Financial Plan for the coming future.
Ankita Kaushal is working as a blogger for Veronica Karas. She provides How to make better financial decisions and has a team of expert financial advisors to assist her in every project. Get in touch with her now for any assistance regarding Financial planning.