Keys to Financial Planning – Tips to Better Financing

There are keys to financial planning, to start your engine of savings and financial success. Pick up any number of books on the subject and you will find savings tips. There are a common threads on this line of thought, and here are the major “keys”.

1. You must have a complete picture of your personal financial situation before you can do financial planning. You can plan, but until you are in a positive cash flow, you cannot enact any of your plans. So, the first thing to do is calculate your net cash flow. Total up all you owe, and all you earn. For the “owe” column, include bills, upcoming expected expenses that you will have (like if you are expecting a baby), and normal living expenses like food, gasoline, medical, and clothing expenses. For the “income” column, include all money you expect to receive (after taxes). Do these calculations either for a month or a year. If you do it for a year, divide by 12 to get an average monthly cash flow picture. Once you have your totals, deduct the expenses from the income totals. This is your net cash flow. If it is a plus figure, you are above the line.

If it is a negative figure, you are below the line and need more income. If you have a plus figure, then you can do your financial planning. If you have a negative figure, you must find ways to generate more income before you need to do planning. Obviously, everyone wants to be in the plus cash flow area and plan for getting more money out of life. So, don’t get discouraged, just sell something, lower your monthly payments through negotiation, or get another second or third job. You want to do some planning.

2. Second of the keys to financial planning is to do some research before you try to invest your money. A savings account may not pay much interest, but it is secure. Money market funds are another place to add savings up. If you play in the stock market, don’t think of it as play. It is serious business; you need to learn how to work it. Don’t count on the casino slots! Learn to take care of your money. Maybe the best investment now is a house. Look around to see your options.

Do not sit on your laurels and hope for the best. You can work your investments. Think of every investment as a little employee out earning money for you. If they don’t, you replace them with one that will. Be flexible, and continually educate yourself about money. Read books, read websites on investing and financial planning.

3. Third in the keys to financial planning is to stay active. Do all you can to earn more, invest more, and watch your investments like they were in your top coat pocket. Don’t count on someone else to earn you money!

That’s all the keys you need. Know, Learn, and Guard.

Personal Financial Planning Tips

Do you regularly find yourself with plenty of money to spend after payday, only to be left short half way into the month?

It is all too easy for many people to live day by day, without really looking at their financial position. This is a trap which will often lead to living beyond your means, building up more credit card debt and just making that debt mountain bigger.

Here are some basic tips to help you better deal with your financial situation.

Monitor your spending

A little bit of planning and monitoring can go a long way to solving this and help you on your way to becoming debt free.

The first step is to work out all of your essential outgoings for the month, for example:

  • Mortgage/Rent
  • Tax
  • Existing Loans
  • Credit/Store cards
  • Expected Bills
  • Transport costs (Petrol / other vehicle costs)
  • Food
  • and anything else which may apply to you.

Take all of that off from your monthly pay, and you know how much at the most you can spend over the period.

It’s not a pretty picture is it?

…But it is an essential step to realizing your financial position.

Given this information, you can work out how much you can afford to spend per week, and record this expenditure in order to ensure you are staying within your means.

Watch out for unnecessary expenditure

After monitoring you spending for a month, you can really begin to see where it is all going. At this point you can start to think about what is really necessary, and what can be cut
out or cut down.

For example, Do you really need to buy lunch at work every day, when you could bring in something from home?

How much are you spending on luxuries like going out? Could you cut this down?

Keep in mind that you do not need to make a financial plan so extreme that it takes any joy out of life.
Allow for occasional treats and luxuries, but plan in how much you will allow.

Cut out the impulse buys

There is no point in being frugal for most of the month, only to blow all of the money on impulse part way through. This is where you need to be strong in sticking to your plan, and avoiding
temptation.

Before you buy that item that you just have to have, at least sleep on it and consider it first.

Things may look different by the next day, and you may have saved yourself a lot of wasted money.