Your education in financial planning begins with your first piggy bank. Every time your relatives give you a little something, you gingerly put it away for a rainy day.
When you’re all grown up and earning a regular income, the need to save is never more pronounced. But a piggy bank just doesn’t make the cut.
So how do you start planning for your financial future? Here are the 7 steps you need to follow:
1. Start now
Ask anyone; it’s never too early to start planning your finances.If you start saving now and continue for 10 years, you will have more money at 65 than someone who starts 10 years later and invests for 30 years! That's the power of compounding.
Usually, your saving is the money that remains after your monthly expenditure is deducted from your income. Instead, your monthly expenditure should be the amount left over after you’ve put aside your monthly savings. It’s a little tweak, but it makes all the difference.
3. Make a budget
A budget is a necessity and can also be a lot of fun to make. Talk to your friends and family, monitor your expenses using phone apps or a notepad, and challenge yourself to find creative ways to stick to your budget no matter what!
4. Control debt
Once you start earning and banks become more willing to lend you money- in the form of loans or credit cards- it’s easy to feel like you have more money to spend than you actually do. While borrowing is not a bad thing, it’s important to keep it in check so you don’t have to sacrifice your investments to pay off your debt.
5. Buy insurance
Be it accidental, health, car or life insurance, this is a layer of protection nobody can do without. Buying insurance is a great way to begin financial planning, as it secures the very future you are planning for. Insurers these days offer a variety of customized plans for all sorts of customers, so do you research and start paying for protection!
6. Ask an advisor
It’s important you do research before you make anything official. Whether you hire a financial advisor to help you in the initial stages, or ask for help from a friend who’s good with money, or even just Google your way to enlightenment, make sure you clarify all doubts and ask all the questions!
7. Make a will
Making a will is the best thing you can do for the future of your loved ones. It ensures that they don’t have to struggle to use the money you wanted to leave them. Plan and write a will detailing your financial investments and assets as well as whomsoever you want it to benefit at the end of your financial lifecycle.
Financial planning ensures you can cut the cake and eat it too. Save money now, be prepared for life’s uncertainties,avoid cash crunches and at the same, reach all your goals- financial or otherwise. Now that’s a sweet thought!
While credit cards come with a host of benefits, they must be used carefully, and never in these situations!