Personal finance tips
Personal Finance

Personal Finance Tips For Financial Planning

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The decision to get your personal finance in order can be a tedious and scary one. One of the biggest obstacle is knowing where to start and how to go about it. The most important part of anyone’s financial life is saving. Whether it is with low incomes or one income, anyone can save to secure a stable, financial life.

 

Get Intimate with your finances

If you are a couple, you and your partner need to sit down and have a financial talk. Calculate your total net worth to see just how much you’re worth together. You cannot go about getting your finance in order if you have no idea where you stand. The same thing applies if you’re single. Sit down and calculate what you’re worth at the end of the year. Are there rooms in your finances for changes?

 

Know your expenses and secure a workable budget

Your total expenses is the money walking out your pocket. What are your fixed expenses? What are your floating expenses? Can your finances be negotiated in any way? Knowing how much you spend on average and how much you earn, tells you how much you actually have to spend. Not many people are fans of budgeting but at least know what you’re spending your money on and knowing if it is a waste. Wasting money is easy if you have no idea that you’re wasting it. You do not need to make a strict budget plan because then you lose sight of having fun in your life. However, you do need a financial plan and even without a professional to help, you can still formulate one that is perfect for you.

 

Related: how to make a simple personal budget

Related: 10 things you are wasting money on 

Have an emergency fund

Emergencies are unexpected and sometimes expensive. Whether it is new tires for the car, replacing a section of your roof, funeral expenses, getting laid off, medical expenses, you name it. Having an emergency fund helps to alleviate and prevent the accumulation of debt. You want to prevent a deviation from your financial goals. Professional financial planners and advisors will tell you that it is vital to build an emergency fund that covers at least 3-6 months of your total expenses.

 

Related: How to build an emergency fund on low income

 

Automate your savings

Many people refer to this as paying yourself. It is a very smart and effective method of saving. This is especially for people who have direct deposits set up for their incomes. Have your bank automate a select amount to be added to your savings account each month. This method makes it easier to be dedicated to saving.

 

Always try to earn more

You can never make too much money. You don’t need to go ahead and get a second or third full time job because there are many ways to earn money on the side. Whether it be via passive income streams or side hustles.

 

Related: 7 side hustles to make over $1000 per month

 

Pay off and prioritize high interest Debt

Debt holds you back from achieving and sometimes even setting financials goals. Paying off loans, especially high interest loans should always be a priority. The faster you pay off these loans, the faster you can go about getting your finance in order. There are a few methods to paying off loans including avalanche and debt snowball method. Individuals who earn low incomes can use one of these methods to help pay off debts.

 

Related: How to quickly pay off debt

 

Retirement Plan

The thing about retirement is that it is never too early to start making a plan. One of the most popular forms of saving for retirement is the 401k plan. If you participate in your company’s 401k program, try to maximize on it. Contribute as much as you can, especially the percentage your employer is willing to match. Many people find the investment part of the 401k plan to be tricky and too risky. However, with enough research and sound investing advice, you can invest in stock and watch your money grow. Remember investments are calculated risks. Otherwise, you can start a ROTH IRA account. Another way to save money for long term use is investing in your home.

The Ways To Wealth did a break down of Dave Ramsey’s Rules of Thumb which gives you an insight about your personal finance regarding home, investment, car and insurance.

 

Don’t Try To Keep Up With The Kardashians of your Neighborhood

Trying to live another person or family’s lifestyle will only end up being a huge failure. Live within your means and wealth. You have worked hard for your money no matter how small the amount it. Be proud of your earnings. There is no shame in not owning the latest car or buying a huge house or wearing the trendiest clothes. By living within your means you give yourself a chance to build your own wealth.

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