When it comes to personal finance, it is never too late.
As the end of the year quickly approaches, you may be looking at your bank account and feel exhausted about the life you have lived throughout the year. With vacations, parties, and get-togethers, and more time out and about to plan for this December, you are probably wondering where did the time go. You are also probably wishing there was a simple trick that allows you to never have to worry about managing your money again? While that may not be realistic, there are some simple things you can do right now to improve your money situation.
Start out the new year well and try out these five key things to successfully manage your personal finances. If you stock these, your financial problems may start to diminish, and get your situation back on track to what you had initially planned for at the beginning of the year.
1. Detail Your Financial Plan
Don’t just jot down your new year’s goals, detail your goal especially your financial goals in a financial plan. Your financial plan should include establishing a budget, analysing your monthly cash flow and creating a road map to get you out of debt.
Ensure your financial plan includes the following:
| Plan | Description | Recommended |
| Big Purchases Plan | A plan for big purchases such as a house, vacations and any other luxuries or dreams you may have for you and your family. | Don’t wait to have the money to consider making plans for big purchases, Write down what you want and then work towards it. |
| Savings Plan | A savings plan to cater for an emergency fund, short-term needs and long-term needs. | A general rule of thumb is to save at least 10% of your income. Use your savings to contribute towards your plans no matter what stage of your financial plan you’re in. |
| Budget Plan | Make and stick to a budget. It will help you understand your financial journey and also help you get out of any financial quagmires. | Consider using envelop budgeting system (try the Goodbudget app), which uses cash for spending areas that require more discipline. Plan ahead to avoid any overspending. |
| Income Plan | Set short-term goals, like increasing your income. | Sometimes, reducing your expenses isn’t always the answer. So if you find yourself having a hard time to make ends meet even after cutting back, look into increasing your income. |
| Expense Plan | Set short-term goals to decrease your spending. | Look for areas within your budget in which you can cut your budget to increase the cash available for your debt payments or savings. |
| Debt Plan | A plan to reduce debt. This will significantly improve your cash flow and allow you to reduce your timeline to meet some of your long-term goals. | Categorise your debt; pay your debt starting with the highest interest debt to the lowest interest. Also, consider selling off unused items around the house to find extra money to add to your debt repayment plan. |
| Retirement Plan | Detail your long-term needs. How much will you need upon retirement? | Save and invest to meet that need. |
Put the above items in a timeline and figure out when the SMART goals you have created, will get you there. Seeing your financial plan coming to life will give you the morale boost you need to keep going and even dream bigger.
Get started: Get our financial planning workbook from our online store here.
2. Save For Retirement
This is a big one because most of us millennials aren’t saving for retirement. The future upon retirement will be very expensive and therefore, we need to save diligently for retirement. You might say that you don’t make enough to save for retirement as a big portion of what you earn goes into rent, debts, HELB loans etc. or you even don’t have a steady income to start with. However, the key is to start early with what you have so that you won’t have to put aside more to meet your retirement goals later on.
The more you put off saving for retirement, the more difficult it will be to make up to meet your retirement goals.
3. Get Good Insurance
Good insurance will offer you the peace of mind that you need to ensure that you achieve financial independence. Buying suitable health insurance, car insurance, home insurance and/or even life insurance product that will offer you maximum benefit and financial security is advisable to cover yourself, your spouse, kids and even parents.
It will save you hefty costs and also, reduce the income tax burden.
4. Consult – Ask for Advice
Once have set up the foundation for your financial plan i.e. grown your savings and want to begin investing to increase your wealth, speak to a financial planner to help you make wise investment decisions. A good advisor will help you with the following:
- Understand the risks involved in each investment;
- Find great products that match your risk level and investment return needs;
- Work towards your financial goal as quickly as possible.
You can also find help by asking your parents, other members of your family or even friends that are good with money. You could also talk to your mentor or even your bank or local church that may offer low-cost classes or workshops on personal finance.
5. Educate Yourself
Don’t push yourself to learn everything about personal finance all at once. Instead, break down your finance learning needs into digestible chunks and allocate some time every week to read about those topics. A topic a week is a great way to get you started to understand personal finance and move you to a better place in making better, wiser financial decisions.
Here are some great books you can start with:
- Rich Dad Poor Dad by Robert T. Kiyosaki;
- The Millionaire Next Door by Cotter Smith, Thomas J. Stanley Ph.D., et al.;
- The Richest Man in Babylon by George S Clason;
- Personal Finance for Dummies by Eric Tyson.
6. Review Yearly
As time passes, things change too and with financial planning, you may want to update your financial decisions based on what you’ve learned throughout the year or what has actually happened throughout the year. So, don’t just make guesses about how much certain things cost or have changed. The cost of goods and services rise every year and thus it always wise to take steps to review and try to save at the same rate or more each year.
Your future self will thank you for this. Trust me!
Wrapping Up
Successful and effective financial management doesn’t require much and can improve your life in so many ways. Each of the above keyways will have a great impact on your financial health and security in the long-run. Therefore, cumulative results may have life-changing consequences and thus worth the try.
Go Forth and Conquer!
If you have any questions on your own personal financial situation or need help getting started, feel free to send me an email at [email protected].
Image credits: by Bich Tran via Pexels.
See also:
- Buy!! The Financial Planning Workbook
- 5 Amazing Personal Finance Apps that Make Life Easy
- How Much Life Insurance Do You Actually Need?
- 7 Reasons Why You Should Have A Financial Plan
- 10 Money Mistakes to Avoid in Your 20s
- 8 Financial Planning Rules of Thumb You Need To Know
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