Personal Finance: Planning, Budgeting, Investment, Savings And Retirement

Personal Finance Planning Associated With Budgeting, Investment, Savings And Retirement

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Personal finance refers to financial management of monetary resources available to an individual or family unit. The need to plan, strategize, and streamline cash flow the right way is important to ensure a secure future. This article provides an insightful perspective on personal finance planning associated with budgeting, investment, savings and retirement.

A personal finance plan is extremely beneficial for individuals to ensure security in the unforeseen future. Monetary decisions an individual or family takes can prove catastrophic or wise for the future. Individuals that are determined to succeed should implement a financial plan at a young age. Failure to manage finance the right way can lead an individual to bankruptcy.

Individuals fall in debt due to poor management of personal finance. It is essential to monitor income statements, balance sheets, consumer loans, personal assets, credit cards, and liabilities regularly to ensure you execute a financial plan that works for you. Individuals that do not monitor their expenses and liabilities are at high risk of financial instability in the near future.

Personal Finance Planning: Importance of Savings

A secure future can only be possible if you plan your finances now.

It is of extreme importance to monitor your financial plan regularly. Do not hesitate to reassess the plan if necessary. Be flexible and implement changes keeping in mind your future goals. Keep a check on your spending habits and eliminate commodities that add to unnecessary expenses. You will be amazed by the amount you save. Apart from the employment income that you receive, try and find other ways by which you can generate more income. Setting goals, creating plans and executing them is essential. Short term goals help achieve concrete long term goals. Find ways to increase your monthly income.  

Keep a track on your spending habits when you’re young. Remember, you don’t get wiser as you grow older, you just get old. Being wise when you are young pays dividends as you get older. Individuals in their early 20s that spend more than they actually earn are most likely to do the same in later stages of life. This can have a devastating effect on your future. Research reveals that individuals in developed economies have a habit of spending more that they earn. When you spend more than you earn, there’s no way you can save, you’re headed for disaster. Make sure you keep a small percentage of the income you earn (at least 8%) in savings account. That percentage should increase as your income increases. The foundation of every financial plan is based on saving.

Personal Finance and Budgeting

To execute a financial plan it is necessary for an individual to persevere and be disciplined.

Putting a curb on habitual spending and making smart choices is necessary to be successful. Keep a track of monthly income and expenses to get a clear idea on how much you save. When you go through the balance sheet of monthly expenses in a year you realize that a significant amount spent is on commodities that are not a necessity. Unnecessary expenses are savings wasted. Spending money wisely ensures better savings. A way to make a significant impact on savings that help strengthen a personal finance plan is to spend on second-hand or used commodities. For instance an individual that purchases a car that is barely a year old doesn’t lose much value on the value car, but gets it at a significantly lower rate than a brand new one.

There are several ways to earn money other than the income you receive from your job. For instance if an individual at a 9 to 5 job is also a musician, then it makes sense for that individual to earn extra income by taking music classes. An individual that is frugal in terms of expenditure is more likely to benefit from financial plans. Individuals that purchase a house end up exhausting all their savings. Everybody wants to own a house; however, it does not have to be a brand new house. Individuals make the mistake of spending enormous amount on brand new home. Realize you can get a used house for half the price or less in a good deal. Moreover, even if you decide to renovate or remodel your house, the amount involved will be less compared to the cost of a brand new home. Executing different components of a financial plan is necessary to ensure future benefits.

Individuals need to curb expenses in accordance with the income earned. Make sure you pay off loans on time. By making bill payments on time you can save on late fees. Busy individuals end up spending a considerable amount on late fees. With online payments accepted, there should be no reason individuals pay bills late. Make sure you pay credit card bills regularly and on time. A good credit score is beneficial for investments at the time of diversification.

Personal finance and Investment Planning

A personal finance plan is necessary to ensure the right investments are made for the future. Managing money becomes easy when you are clear about your personal finances. Tax planning is necessary to ensure the success of your financial plan. Often individuals are not aware of government grants, subsidies, incentives and tax deductions. Utilizing available resources intelligently can impact financial investment in a huge way. Utilize the incentives given in the form of credits and tax deductions by the government as they help reduce tax burdens drastically.

Individuals that accumulate assets in large proportions find it difficult to diversify risk in investment. Individuals need help of financial advisors and financial planners to ensure proper wealth management, disbursement of cash flow in investments, and advise on business plans. Based on balance sheet figures, income statements, personal assets and liabilities, financial planners advise individuals on utilization of savings in different investments that secure the future. In financial planning areas of prime importance are:

  • Investment Goals
  • Financial Position
  • Retirement planning
  • Tax planning
  • Estate planning
  • Insurance protection

Personal Finance and Retirement Planning

Proper planning and execution of personal finance plans are instrumental in shaping a secure future. It is necessary to manage your personal finance well to ensure benefits in the future. Most individuals consider financial planning to accomplish concrete goals. Planning, assessment and execution is important in various scenarios of wealth management. Financial planners use value calculators based on individual net worth to determine how personal goals can be accomplished. Individuals also need to avail of the right insurance policies to ensure it benefits.

Retirement planning is necessary to ensure there is sufficient money at the time of retirement. In order to have sufficient funds at the time of retirement individuals need to strategize and plan investments. Financial planners or financial advisors provide individuals with vital indicators of distribution and saving of assets required for retirement. Wealth accumulation and goal planning varies in accordance with different individuals. Majority of money management plans are for:

  • Purchasing a house
  • Starting a business
  • Retirement
  • Lifestyle expenses
  • Medical Expenses
  • Education expenses 

Personal Finance Management

Most individuals with large amounts of personal assets use cash flow in different investments to minimize risk. Stock is an excellent long term investment associated with wealth management. Individuals invest in stocks to take advantage of long term gains. Knowledge on buying and selling is essential if you want to invest in shares or mutual funds. If you are not familiar with stock market trends it is recommended you seek advice from stock brokers. Making the right investments in insurance policies is necessary to safeguard your future. Determining the type of insurance cover that benefits in different scenarios is crucial for personal finance plans. Good insurance advice is important to ensure you invest in useful policies.

There are several websites that provide excellent information on personal finance. Seek advice from family and friends that are knowledgeable on personal finance scenarios and do not hesitate to employ services of trustworthy individuals that help you with different aspects of financial planning.

Individuals have to manage and plan personal finance being aware of unprecedented events and financial risks that can occur.


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  • iggy  16-11-2017
    Start young to build a successful portfolio, I started later in life and still am not where I feel comfortable. I learned from this article and found it beneficial. I always try to diversify for protection. Well written and very informative.
    reply 1
    • realityspeaks  17-11-2017
      Yes, When we start young it makes it easier as we grow older. Furthermore, financial security is very important after retirement. Diversification is a good way to minimize risk. I'm glad you found my article beneficial and informative. Thank you.
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