Personal finance is one of the best things anyone can do with planning their future. Better planning can result in a safe and happy life after your retirement or even in the near term when you need the funds. These funds can be used for any cause, maybe for your wedding, business, kids’ education, and more. The early you start saving, the better you’ll be able to manage these later without worrying about the money.
In this article, we are going to talk about how to create a personal financial plan in an effective way. These are easy and effective ways to implement. You can use a simple excel sheet to do this or even can use any personal finance calculator to create one.
I personally use this family budget planner to plan the budget for the family expenses. The calculator asks you your monthly income, expenses, and few other details and then shows the result. You can analyze these result and understand how your income and expense looks like.
These percentages have been shown as standard rate and you can change these according to your family by going through the rate tab and change it. This helps you manage and plan your monthly budget in a better way.
Now let’s start and look for the steps to create the monthly finance-
#1 Write your financial goal
Having the goals defined is the first step and most important step in your financial budget. As a first step, you should start penning down the goal and this can be anything that you think needs some big deal. It can be anything like planning for your marriage, kids, their education, buying a property, and more. Once you have the goal defined, believe me, you’re half of the work is done.
#2 Start an emergency fund
You never know when something bad or urgent can be required and for such purpose, you need an emergency fund. I follow the standard rule like keep 6 months of your monthly salary as an emergency fund and forget if you have that money also. This way, you can be sure about the fund when that is really required. This can be used when some pandemic like COVID comes or when you meet with some unprecedented stuff.
#3 Pay off debt
The truth is you can not start your financial planning with tins of debt on you. So, before you start your financial planning and saving, you should clear all your debt. This can be any loan, credit card bills, and any other unsecured loans.
#4 Plan to invest
Now, this is the big thing where you should learn the art of investing. Please note that the investment technique working for me will work for you as well. You should first learn, access your risk profile and then start investing. Some safe options can be bank fix deposit, government schemes. Others can be SIP, mutual funds, real estate, stocks, and more. Please note you should learn and then only start investing.
#5 Review your plan frequently
Now financial planning is not a sprint, it is a marathon and so you should review it and amend changed as required. You may review this quarterly or yearly where you can see whether your portfolio looks the same as you expected or it is going elsewhere. If it is a later case, then you should re-access the profile and start investing properly.
These were all about some quick steps to create your personal financing. Make use of calculators to precisely calculate it, pay off your taxes, invest properly, are some of the great ways to do it properly.
What are your plans to manage your financials?