Most people realize the importance of financial planning, but not many are disciplined enough to make a plan and stick to it. Being financially responsible will ensure that you feel secure and do not have to worry about your family’s future. By keeping the financial aspects of your life organized, you will be able to deal with unforeseen problems and emergencies.
Form a habit of saving
My first advice to anyone who starts management of his or her personal finance is to inculcate a habit of saving. Make sure that you put at least 10% of your income in a separate savings account, which you should not touch unless there is an emergency. Put a tenth of your salary into the savings account on the same day that you get the money. You will easily get accustomed to living with the remaining 90% of your income. This money will be very useful when you face a major unforeseen expense.
Make a budget
The second thing that you need to do is to make a budget. It need not be a very detailed budget, but it should take into account your major expenses and income sources. It should roughly divide the total income into various heads of spending. This will give you an idea about the extra money that you have for your luxuries and enjoyment. By sticking to the budget you will ensure that you do not live beyond your means and end up getting into debt.
In order to make a budget and follow it, it is important that you keep your documents in order. Keep your bills, credit card statements and CDs in a safe place. This way, you can easily take stock of your income sources and expenditure.
Make financial planning fun
Saving money and sticking to a budget can get tedious and boring sometimes and you can easily lose your motivation. Make it more interesting by setting goals. If you have some clear aim in mind such as going on a long vacation or buying a new car, then it will be easier for you to stick to the budget.
You should also keep smaller goals in place such as increasing your savings by 1% after two months. Meeting these smaller goals will give you a sense of achievement and will keep you on track, and you would soon see the results in your savings account.