- Date : 13/10/2020
- Read: 3 mins
Regardless of your age, gender, income or location – financial planning is a must for retirement. To take the complexity out of the process, here’s a 7-step guide to meet your financial goals
Your education in financial planning and personal finance first began with your piggy bank. Every time your relatives gave you a little something, you gingerly put it away.
When you’re all grown up and earning a regular income, there is a crucial need to save for a rainy day. But a piggy bank just doesn’t make the cut.
So how do you start planning for your financial future? What are the financial alternatives to consider? It all begins with setting financial goals. Here’s a seven-step financial course of action for you to emulate.
1. Start now
It’s never too early to start financial planning. If you start saving now and continue for 10 years, you will have more money at 65 than someone who starts 10 years later! That's the power of compounding.
Related: Financial Planning Pyramid
Usually, your saving is the money that remains after your monthly expenditure is deducted from your income. Instead, try this insider tip of personal finance: 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
This is an important aspect of financial planning. A budget is a necessity for every person who wants to meet their financial goals. Talk to your friends and family to get tips, monitor your expenses using personal finance phone apps or a notepad, and challenge yourself to find creative ways to stick to your budget no matter what! You can use this Monthly Budget Calculator to manage your regular expenses.
4. Control debt
This is essential when it comes to finances and planning. 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 debts.
5. Buy insurance
Insurance – be it accidental, health, car or life insurance – is an indispensable layer of protection that should be your top priority. 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 different customers, so do your research and get the best insurance for yourself and your family.
6. Ask an advisor
It’s important you do your research before you make any investment. Whether you hire a financial advisor to help you in the initial stages of your financial planning, 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.
This guide to financial planning can help you save money now, be prepared for life’s uncertainties, avoid cash crunches, and at the same time meet your financial goals as well as other life goals. If you are looking for some effortless ways to save money, take a look at this gifographic.