Ultimate Personal Financial Plan
Looking to revamp the way you manage your money? Check out these seven simple steps that will take your personal financial plan to a whole new level.
1. Budget, budget, budget. You’ve heard it before, and you’ll hear it again: The first step to creating any good personal finance plan is to put together a budget so you know exactly where your money is going and exactly how much you can spend. Start by tallying your necessary expenses for the month (rent or mortgage, utilities, cell phone, etc.). Then subtract that number from your monthly income. That’s how much money you can spend on everything else: food, entertainment, clothing, and more. Divide that number by four to see how much you can spend per week without going over budget.
2. Give in to tech. When it comes to managing your finances, one of the biggest favors you can do for yourself is to go paperless. Do this by using the digital tools that are available to you.
3. Identify your savings goals. It’s important to determine your short- and long-term savings goals so that you’re aware of how much you should be saving each month (and that amount should go right into your budget!). These are things like a vacation or car (short-term goals) and retirement or a home (long-term goals).
4. Plan for emergencies. Everyone should have an emergency savings fund so that for the “oh crap” moments, you have a back-up plan. Set aside just a little money each month and don’t touch it, unless you really need it.
5. Bargain shop. Are you someone who thinks that spending more means getting more? If you answered yes, then think again! There are ways around spending top dollar for high-quality clothes and other items — you just have to dig a little. Try thrift store shopping or using retail savings websites.
6. Reduce your debt. You can reduce your debt by making larger-than-normal payments to your credit card and student loan bills. When you only pay the minimum amount due, you pay more money in interest in the long run — and it takes longer to pay off the credit card or loan. Even paying just a little more than the minimum amount due could shave off several hundred dollars, depending on how much you owe — not to mention a few years — from your total balance.
7. Don’t overthink it. No one is perfect when it comes to managing money, so don’t be too hard on yourself if you don’t stick to your budget every day.