6 tips for personal financial planning

Having personal financial planning can be the first step in changing your financial situation and putting an end to the headache caused by the lack of financial security.

Good planning begins with understanding how your personal finances work and setting financial goals. From there, with determination and some changes in habit, managing finances will be easier. Here are 6 tips for personal financial planning:

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Understand how your personal finances work

Each person has their own way of consuming and organizing their money. While some find it easy to save, others always give in to impulse shopping and stay in the red before the month is over.

To put together good personal financial planning, you need to understand how you handle money and how your personal finances work. Do you spend more than you earn? Do you have an emergency fund? Do you have debts?

Define your financial goals

Once you understand your finances, it is time to define your financial goals. At this point, it is important to be realistic. There is no point in stipulating the goal of saving $200,000 in one year if your salary is just $2,000 right? Try to think of something that can be achieved and break the goal down into short-term goals.

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Take notes of your income and expenses

Taking notes and tracking your income and expenses on a monthly basis is another important tip for personal financial planning. When you know how much you earn, how much you spend and, especially, where you spend it, you get to know where it is possible and necessary to cut expenses, in addition to identifying potential savings.

Compare prices before buying

Comparing prices before making a purchase saves you from wasting money by paying more for an item, as well as avoiding impulse purchases.

With the Internet, this task is much easier to do. Simply place the product or service you want to buy and see the best prices available. Also pay attention to the store’s reputation. After all, there is no point in paying cheaper and buying in a place that is not reliable.

Learn how to save money

Learning how to save money starts with a very simple goal in mind: you need to spend less than you earn. It may seem obvious, but many fail to achieve this goal within personal financial planning. Result: they are always in the red and need to use loans to cover the holes in the account.

Learning how to save money involves assessing expenses objectively, having realistic goals and, above all, determination and persistence to change habits and save a little each month until you reach your goals.

Learn how to invest money

After learning how to save, it’s time to know how to invest the money you have saved. First, understand your investor profile (conservative, bold, moderate) and the amount you have available to invest.

Align this information with your financial objectives and look for investments that are suitable for this equation. Anyone who wants to have money for retirement may prefer long-term investments. Those who are terrified of losing money may not do well in a riskier investment such as the stock market, for example.

Make your personal financial planning now and take a turn in your finances!

Translated and adaptaded by Bill Pay

Source: Guiabolso