Money is the most important asset, well because it enables you to buy basic necessity as well as luxurious one. Apart from that, money requires hard work to earn and hence there must be proper way of expending it. Because, believe me, if not taken care of money can come and go within a blink of eye.
Therefore, to make best of out of your money, you need a financial planning. As the quote says “It is not about how much you earn, it’s about how you spend it”. So, let’s dive directly into how you can manage your finances.
- Define your goals
Start with defining your goals. Here, goals actually mean, what are you trying to achieve with your present financial situation. You must have exact idea of what you want to accomplish with your strategy.
Plan is necessary to build your strategy around it.
When planning your finances you need to consider everything, like, number of children you have right now? Number of family members? Does any of your children go to school? Their fees? What age you are trying to retire? Do you have any current debts or loans?
Simply, question every aspect of your financial condition. This will help you with your strategy, to define what you are capable of expend right now and where without financially crippling yourself.
Budget is important as it enables you to determine if your money is able to perform what your aim is. Once your budget is in place, it is easy to prioritize your work and also to redirect your money. Without any budget, it is quiet impossible for you to check whether or not your money is being utilized or is wasted. For example, your budget includes some non-negotiable expenses like house rent, school fees, insurance payments and all sorts of taxes, but your budget also includes negotiable ones like groceries or utilities, but you can cut these expenses.
- Cut Expenses
As discussed in previous point, there are certain types of expense which are necessary but still we can cut back in those areas. For example groceries: o mean it is not like you have to starve, but you can cut back.
- Have an emergency fund
Once the important expense are laid out, it is time to save up for emergency cases. There are few unfortunate incidents that might drain up your finances, instead of being left out high and dry in that time, it is better to start saving up of it.
- Save for other goals
Apart from necessary requirements, every person have some luxurious goals as well. For example, saving up for home is of course a necessity, but people also want to have car. Therefore, you need to start saving up for those kind of goals as well.
- Have proper insurances
See, finances are the tricky area. You need to be prepared before a storm hit you. Money is important and prevention is the best strategy. You financial plan must be full proof, preventing you from any sudden financial crisis.
A robust financial plan can help you from being financially crippled in difficult situation.Tags: accounts, budget, emergency fund, expenses, Finance, fund, insurance, taxation