Having a solid financial plan is necessary in financial management. No matter how big or small your fund is, your financial plan is a deciding factor in obtaining a secured life whether you are a new employee, a successful business owner or already preparing for retirement. This is a way to figure out your present status and to create a clear vision of what you want to accomplish in the near future.
An effective financial plan is crucial whatever your age, social status, or income is. Creating financial strategies may sound overwhelming so here are some simple guides you can follow to help you in building a financially secured future.
Goal setting. The goal is your desired result and in starting your plan for your finances, you must identify what your goals are, before anything else. You should have two goals, short-term and long-term. Identify which is which and list the things you want to accomplish to begin strategizing for your financial plan. Your sets of goals will help you devise your course of action easier.
Short-term goal is something you can accomplish by next year or so. This can include personal goods, payment toward rent, loans, insurance and other debts such as credit card. Make sure that your emergency fund will cover at least three months of your expenses. Your loans and debts should be paid on or before due date or set bi-weekly payments to pay them off faster and avoid any financial trouble.
Long-term goal can be saving for your retirement, for a business or for your child’s college education. You can start this by saving 10% to 15% of your every paycheck to your savings account with a high-interest rate.
Budget creation. Setting a monthly budget plan enables you to foresee how much income you have which includes side hustles, salary or from investments and how much you can actually spend on a daily, weekly or monthly basis. Your expected monthly monetary resources will make you visualize clearly how your hard-earned money should go in and out of your pocket and how you can eventually save for your goals. The 50-30-20 budgeting rule is one of the best ways to understand your current cash flow. 50 percent of your net income goes to essential expenses such as food, rental or mortgage, water and electricity. The next 30% is for utility expenses and for occasional dining out or recreations. The final 20 percent should go for savings which can be a part of your long-term goals.
Consider short-term loans. Let’s admit, loans and debts are already part of our life, especially nowadays that there is still an ongoing crisis around the globe. But before diving into a huge amount of loans, why not try short-term loans first such as cash advance that is easier to manage? Cash advances can be availed without a lot of requirements and can be withdrawn from an ATM, a bank or via a paycheck. You also don’t need a very high credit score to be able to qualify to this kind of loan.
As we go through life’s journey, it is important that we understand and take these financial strategies seriously. They help us become financially savvy that we can effectively manage our income, expenses and investments towards a financially sound future.