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Understanding And Creating A Financial Plan

Updated on August 28, 2012

Financial Planning: Understanding Finance and Creating a Financial Plan

Financial planning and understanding finance is not rocket science. Most of it is self-discipline, however.

However, financial planning and creating a financial plan for yourself and better yet, understanding the mechanics of finance doesn't have to be painful!

Spend time doing a little research and more importantly, spend time going over your own finances meticulously. Be honest about your expenditures and then brainstorm ways to cut them or eliminate them altogether.

You'd be surprised how many thousands of dollars we waste each year because we don't take the time to think about our own financial plan.

Here are some of my suggestions for understanding finance and creating a financial plan you can live with.

Financial planning is something that will last you a lifetime--and don't forget to reevaluate your plan from time to time and make adjustments.

Formulate some long-term goals

  • What will you do in the future?
  • What are your financial goals?
  • Can you realize them?

Insurance---Enough or too much?

  • Consider age and dependents
  • Protect yourself from catastrophes
  • Evaluate different kinds of plans

Never spend more than you earn

  • Draw up a budget
  • Stick to it
  • Track expenses

Always find the best price

  • Research every avenue
  • Price compare
  • Look for coupons and offers

Never buy on impulse

  • Take time to think it through
  • Research before you buy
  • Price compare everything

Credit---Good Credit takes work

  • Make it work for you
  • Always know your credit score
  • Get your credit report

Invest wisely

  • If it looks too good to be true, it is!
  • High-risk investments are just that
  • Stick to quality investments

Always pay yourself first

  • Your financial backbone is saving
  • Save $1 a day at least
  • Savings are for emergencies

Learn to live frugally

  • Cut costs across the board
  • Less is more--almost always
  • Pretend you are broke

Purchase financial planning software

  • Set up an honest budget
  • Track expenses
  • Keep a diary of what you spend

Learn to say no

  • Don't buy unless it's on sale
  • Everything is on sale sometime!
  • Find coupons, refunds and deals

Always evaluate why you're spending

  • Need is one thing
  • Want is another
  • Why is it a must have?

Never overpay when you buy a house

  • 2-1/2 times your salary--rule of thumb
  • HUD homes or foreclosures
  • Money down reduces mortgages

Negotiate rates/examine periodically

  • APR rates can be bargained down
  • Abolish fees on credit cards
  • Get cards with rewards

Investigate your options

  • Review utility bills and check rates
  • Check special allowances or plans
  • Lower mortgages by refinancing

Navigate taxes & how to save on taxes

  • Consult on ways to pay less
  • Learn how to save on taxes
  • Find out more on property tax

Get the most bang for your buck

  • Go green--use less fossil fuels
  • Use less of everything you buy
  • Learn to recycle almost everything

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    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Hanna, I don't think I'd last a day....I'm way too honest!

    • Hello, hello, profile image

      Hello, hello, 7 years ago from London, UK

      Audrey, I think we send you to Wall Street and I am sure you do miracles there.

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thanks, Simone - a little different form feels good every once in a while!

    • Simone Smith profile image

      Simone Haruko Smith 7 years ago from San Francisco

      Hehee- this is really fun! Love how you packaged important advice in such a friendly, playful format!

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thanks so much, Pamela - I had a little fun with this one!

    • Pamela99 profile image

      Pamela Oglesby 7 years ago from United States

      Audry, Some great information in this hub and I love the way you designed the page. Rated up.