A lot of people want to establish a financial plan, or at least a budget at first, taking an even more active role to manage their investments. While it’s great to see a lot of ’expert’ financial advice online and from loved ones, it may be overwhelming for those new to financial planning.
The first thing you should do when financial planning is to start with one very simple step. Then, you can work your way up slowly but surely, gaining success along the way. This is better compared to following just any advice you come across quickly which puts you and your finances at risk.
To further help you out, we give you advice on how to do financial planning, based on experts like Financial Mappers. Read on!
7 Insightful Financial Planning Tips
While you’re young, it’s tempting to procrastinate planning your life. There are so many more years for that anyway, right? Plus, it’s intimidating to plan for your life at such a young age, thinking that it’s a job for older adults.
Well, the truth is: It’s never too late to start planning for the future, especially when it comes to your finances. The sooner you begin putting even a few of the pieces in place, then the more secure life becomes for you today and the next years to come.
So, where can you start? Here are a few helpful tips to kickstart your journey towards financial stability:
- Learn to Self-Control
It all begins with self-control, which your parents may have taught all of us when we were younger. If not, then it’s time to begin learning and adopting the art of delayed gratification. Once you do, then the sooner you can get your personal finances organized.
Sure, it’s easy to purchase something you want using your credit card because you’d like to have it NOW, but why not wait until you have the funds to purchase the jeans without the interest?
Adopt the habit of controlling your urges to purchase things, adopting the mindset to save and set budgets for how much you can spend on wants and needs.
2.Know Where Your Finances Go
If you studied more about personal finances, you’ll see how vital it will be when ensuring your expenses don’t exceed how much you take home. In order for you to follow this tip, you’ll have to budget.
See how much daily expenses like coffee from cafes can add up throughout the course of a month and you can see how making small changes in everyday life can greatly affect financial situations, whether good or bad.
Keep the recurring monthly expenses lower, which can save you a lot in the long run. While your income allows you to purchase more expensive cereal brands and whatnot, picking plainer or more affordable varieties can do wonders with your finances in the future.
3.Have an Emergency and Retirement Funds
One of the best mantras to follow is to always ‘pay yourself first. Regardless of how much debt you have or how low the pay is at your job, you need to always set an amount from your income into an emergency fund monthly. This can help prevent you from experiencing financial troubles while helping you sleep well without worrying about what you can buy tomorrow.
Besides this, it’s important that you already begin saving for your retirement as early as now. While this may seem like centuries away, you’ll be surprised with how little you’ll need to invest in right now, and how much you can receive once the time comes. Look into your company plans or set up a retirement plan yourself.
4.Learn About Taxes
It’s crucial to understand the ins and outs of income taxes, which you should already know before beginning your first job. When companies offer starting salaries, one should learn the process of calculating, seeing if that salary gives enough after taxes, so you can meet financial obligations and personal goals.
5.Stay Healthy!
Invest in health insurance! While this may seem like a huge dent in expenses, imagine how much you’ll pay in case of sudden illness or accident? You never know what can happen and your emergency fund can only do so much, which is why it’s best to invest in yourself and your health now.
6.Planning Your Investments
There are so many ways you can invest. One common path is contributing to superannuation or to invest in real estate, if you have the funds for it. When you own rental property, you have consistent passive income, so you won’t need to do much to still receive a steady income.
But, regardless of what you invest in, it has its pros and risks. Make sure that you measure all of this before you make the move to invest, knowing what you are getting into and calculating the potential losses. In case of a failed investment, you should still have your emergency fund and savings to cushion the blow.
7.Protecting Your Wealth
And of course, protect your finances with the proper insurance. Avail home and/or renter’s insurance, which will your home’s content in case of robberies or accidents. Disability income insurance is also a valuable asset to ensure you still continue earning even if you can’t work and/or complete tasks for a certain period because of injury or illness.
Wrapping It Up
Unfortunately, there are no subjects on personal finance in high schools and colleges, leaving a lot of young adults lacking basic financial education. However, this is all changing as states are requiring students to take courses in personal finance and economy classes now. Plus, there are many excellent and reputable sources online that can help you take your financial planning to the next level.
Hopefully, these financial planning tips encouraged you to take the right steps in setting a brighter future. Don’t wait any longer and begin your journey towards financial stability right now!
Do you have questions or want to share personal tips and experiences when it comes to financial planning? Share them in the comments section below, your thoughts are much appreciated.