Managing one’s finances entails having a solid financial plan. This is crucial in obtaining a financially secured life whether you are newly employed, a long-time businessman or on your way to retirement. You must figure out where you are at the present and have a clear vision of what you want to achieve in the days to come.
Regardless of social status, income, or age it is important that you have a financial plan that would work for you. Creating strategies for your financial success may sound overwhelming but there are proven financial strategies that you can follow to help you guide in building a secured financial future.
Set your goals. The best way to start planning your finances is to identify your goals. Make a list of the things you want to accomplish for your short-term and long-term goals. This is a smart move in strategizing your financial plan. It is easier to devise your course of action when you have clear sets of goals that you need to achieve in a given time frame.
Short-term goals to accomplish by next year or so. Create an emergency fund that will cover at least 3 moths of your expenses. Limit credit card expenditures and only keep the one that you can easily pay in full within each month.
Long-term goals for your retirement or child’s education or for home down payment. Saving for retirement can sometimes be difficult due to budget constraints. Start by saving at least 10% of your gross salary each year which you can allot for your retirement. Allocate savings for other important long-term goals.
Create a budget. The primary purpose of setting a monthly budget is to give you a foresight of how much income you have which includes sidelines, salary or from investments. Basing on your expected monthly monetary resources, you can now visualize clearly how you will spend your money and how you can eventually save for your goals. A good way to understand your current cash flow is to incorporate the 50/30/20 budgeting rule. This entails using the 50 percent of your income computed right after-tax deductions for essential expenses which includes food, rental or home mortgage, water and electricity, car payment. The next 30% will cover for utility expenses (internet, phone and other subscriptions) and for the occasional treats like dining out or recreations. The final 20 percent should be use for savings which can be applied to your long-term goals.
Consider debt consolidation. When you feel you have the need to take charge of your liabilities or debts, the best option is to have consolidation. This will convert multiple debts and loans into a single new loan which will gain favorable payoff terms. Your debts will be rolled into one that will have lower interest rate and low monthly payment or even both. To know more, check here.
Financial strategies act as guide as we go through life’s journey. They help us control our income, expenses and investments so we can manage our money more effectively and achieve a future-proof life.