Top 10 Tips for Financial Planning
- Sneha
- Jul 11, 2020
- 2 min read
Tip 1: An easy to use tool is a Spreadsheet!! There are many online spreadsheets or you can even make one in a notebook.
Tip 2: You can divide up the spreadsheet into three different sections: Income, Expenses, and Savings. Income is money that you earn. Expenses are the money that you spend. Savings are money that you save for later.
Tip 3: An important step when trying to decrease expenses is analyzing your needs and wants. Your water bill is a need, but going to the movies is a want. By analyzing this, you can find a balance.
Tip 4: Your income should always be greater than your expenses. If you find they are not, then go back to the expenses and cut some of the wants out.
Tip 5: A certain percentage of your income should ALWAYS be set aside for savings. You never know when a situation could arise where you really need extra money. Especially during the time of the COVID-19 pandemic we can really see why savings are necessary.
Tip 6: Your savings can be split up into short term and long term savings. For example, the short term could mean a vacation whereas the long term could be retirement. Another important reason to have savings is for emergencies.
Tip 7: Consider the value of your purchases. Everything you buy should be of value to you. If something you want to buy expensive, then think about if it is something you need or will bring you joy.
Tip 8: Try to pay off all of your debt as fast as you can. Make it one of your priorities in your financial plan. If it is possible, try to avoid taking a loan.
Tip 9: Setting financial goals can help when planning. It is important to create some long term goals, like having a certain amount of money set aside for retirement. A short term goal could be saving enough money to buy a car.
Tip 10: Once you have made a financial plan, you should track how you actually end up using your money. This will help you check how effective your plan is, what you could change, and how to save more money.
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