Finance helps you to reach the goals that you have planned for your life. But at the end of the month, we run out of cash and other assets as we use them anytime and anywhere without doing any proper planning. If you are in a business or you are in doing investments then financial planning is a matter of deep concern for you. Personal Financial planning isn’t only about monitoring your cash flow, it applies to every asset you have.
We all have to come to an age where we have to retire from our job. You need proper finances to live your post-retirement life. This finance can be earned mostly in your working life. But the sad part is saving money becomes a big headache when your expenses are in front of you like your house rent, bills recharge, etc. Therefore a proper plan is to be needed through which you can do all this wisely. Here we will learn how to do personal financial planning.
What Is Personal Financial Planning?
The personal financial planning process is somewhere related to money management. Personal Financial management is very important if you are planning to do a business or do anything that requires assets. Financial planning is the road to take you to the town of a successful financial future. You can take help from online software to do Personal financial planning but the offline method is always on top of the list.
Steps of Financial Planning
If you are also looking for how to do financial planning, you need to follow some steps. Let’s discuss this in detail.
1. Set up a Goal
The first step on how to do financial planning. You should always set up a goal before saving. You can wish for a dream car, a new house, and post-retirement life for your children. All you have to do is set up a goal for what purpose you are saving the money.
2. Track your Spends
What you get and what you give the play a crucial role when it comes to savings. Credit facilities are like butter on the bread of expenses, so choose and swipe it wisely. I would recommend taking a 50/30/20 ratio. Take 50% of what you get for your necessities like your house, medicines, bills, fuel, etc. Take the rest 30% for enjoying life like dining out, cinemas, traveling, etc. And save the rest 20% for your future goal. Credit facilities are designed to make you spend more so take yourself out of this.
3. Make Sure to Save for Emergencies
A coin has two faces. Emergencies are with your life. You don’t even know what time you need to spend funds on these emergencies. It can be a medical bill, accidental spending, or a commodity you need instantly. You better start saving it from today only. When you face any emergency there is a high chance that some amount of money is saved other than your plans to help you to cope with emergencies.
4. Invest to Build up
If you are interested in investing in forex or share or any other plans. You can perform it as it can be helpful to you to increase your monthly earnings. But do this only if you are confident enough that you will earn not lose.
5. Tackle High-interest Debts
If you have a debt, save for it accordingly. Reduce your spending on dining out traveling or any other related item to save for your monthly EMI. Do not keep yourself in the trap of credit companies because they encourage you to spend money for their benefit and charges on their bills also increase your pay. Their algorithm is designed in such a way as to make you spend. They give you mouth-watering offers and for that, your mind tells you to spend money as the commodity is OFFER, and after that, the prices can rise.
6. Can Take Insurance
If you are capable you can take help with insurance because in case of emergencies, this can help you with assets and you have to spend less.
We hope you have got the answer to your query about financial planning. The steps above will help you in the process of how to do personal financial planning
How to do financial planning – FAQ
How to divide the money?
Ans. Sit back with a pen and paper and calculate your monthly expenses. Divide the expense into categories of basic needs and others. This will give you the average of your monthly spending in different areas. Then see your getting assets, calculate them, and save accordingly.