Personal Finance: The ABC of Financial Planning
Plan Your Monthly Budget
Monthly budget makes you aware of your financial condition and helps you to keep a tab on your expenses. The first step towards planning your personal finances is to figure out where your money comes from and where it goes to.
- Jot down all your income (if you have more than one source).
- Jot down all your regular expenses.
- Figure out your average variable monthly expenses, by going through your past monthly bills.
Once you have these figures handy you can start planning your finances.
Financial Planning: The Easy Way
If your income is higher than your average monthly expenditure, your personal finances are in good shape. If it’s the other way round, you need to do some serious financial planning. Whichever way the scales dive to, you can follow these basic steps to keep your finances on track:
Create a monthly spending plan
Now that you know your figures, find out how much you need to spend each month. That’s your monthly budget. If your expenses are high, systematically find out where to cut corners. And stick to that!
Review your budget
This helps you stick to your goals and often exposes some previously unseen corners that you can cut.
Plan for a long term
Emergencies always come unannounced. Create an emergency fund. Save regularly, even if in small amounts. Investments can also strengthen your personal finance, but be very careful about them.
At the end of it, you need to build on your will power! Remember, it’s called personal finance because it’s about your money and your life. Accept your limits and live within that. And next time when you are tempted to go to that expensive diner, opt for a take-away dinner by candle light at home.