Financial planning often seems to be a daunting task for beginners. However, with awareness and some simple tips, it won’t be hard for you to establish your wealth at all. Today’s post will look into 10 golden rules for financial planning so that you can keep surprises and shocks easily at bay!
Instilling the regular habit of financial planning is difficult for beginners, however, even once they are ready to start, they generally do not know what to do. Given below are the 10 golden rules to remember when you start gearing up for a financially secure future-
1. Money management
This step is your first to take and it sure is no rocket science. The intention and commitment to save will kick-start the process of money management with a high degree of commitment. Keep your credit card aside as it is the most expensive form of debt. Before you know it, you will fall into a never-ending debt trap. Set out your financial goals for the month and ensure you keep 10% of your income aside for savings. Here are top 10 finance tracker mobile apps to help you with easy money management.
2. Regulate expenses prudently
In case you survive pay check to pay check and find yourself struggling to meet expenses at the end of every month, this surely means you are spending way much than you earn. There can be many unplanned expenses that crop up. So, it can be hard for you every month. An effective solution for you here is to make a budget. This gives you an idea of the income and expenses incurred every month. It will help you to manage cash flow better.
3. Maintain your personal balance sheet
Here, the balance sheet will tell you what you owe and what you own. It is your personal financial statement rendering you an insight into your assets and liabilities. When it comes to asset ownership, invest in the ones whose value increase with the passage of time.
4. Deal with surplus cash judiciously
In case you do not have a financial plan for your surplus cash, you will tend to overspend. Surplus cash can be channelized into investments that will grow in the future.
5. Make a portfolio for personal investment
If you want to accumulate wealth in the future, start by making your personal investment portfolio. Here again, do not place all your eggs in one basket. Distribute wisely like placing investments in debt, equity and cash.
6. Retirement planning
Just because you are young does not mean you will not plan for retirement. The sooner, the better is the rule as you grow old illness and healthcare costs rise. When planning for retirement, you should consider what age you want to retire and how much money you need to meet all your expenses every month. There are credible resources online like the retirement calculator to help you determine your post-retirement costs and goals.
7. Debt management
Debts take up a large part of your pay check and taking a debt to pay off an older debt will only place you in a trap. Create a strategy for debt management and always pay off the most expensive debt first.
8. Cover risks
Be aware of the risks especially on your investments and insurance. If you are not sure about them speak to a financial advisor to help you.
9. Estate planning
Everyone has an estate and this is hard for most people to believe. Your estate can be your home, your vehicle, even the cash lying in your current or savings bank account. In short, create a will so that your loved ones get what you own after you are not around.
10. Tax planning
Tax planning is crucial and so be aware of the deductions, benefits and exemptions so that you can make prudent choices. Here, expert advice and guidance should be resorted to so that you face no hassles with taxes in the future.
These 10 golden rules to financial planning for beginners ensure you get the wealth accumulation as desired. Ensure you take the advice of a professional if you still are not sure as to where to begin from. In this way, you effectively are able to save every month and secure a solid financial future with success!
