It’s important to have a budget, as nobody is going to manage your finances better than yourself. Having a good and reasonable budget will allow you to achieve your financial goals. It will also help you determine what amount to save and what amount to spend, depending on your needs and income. We all want financial freedom and the ability to create wealth.
An individual’s financial concerns and plans are affected by;
What is your marital status? Who depends on you? Say, kids or parents, will determine whether you are planning for yourself or them included.
It affects expected income needs and risk tolerance and personal financial planning. When planning, you should consider things like protection against the danger of chronic illnesses, accidents, and long-term disabilities among others.
Your career choice affects your financial planning. Specifically through educational requirements, income potential, and characteristics of the occupation of profession chosen alongside career changes. All the changes in career status affect personal financial management and planning.
Needs, desires, values, and priorities all change over a lifetime and financial concerns also change. At a young age, your willingness to assume risk is extremely high. As you age, you’ll need more protection say a pension plan or insurance against loss of employment/ income.
Things to include as you drafting a personal financial plan
- Write down your financial goals
- Have an emergency fund
- Paying off your debts on time
- Have investments
- Have a good insurance cover
- Have an idea for your retirement
- Review your plan frequently and do changes accordingly
- Stick to your plan and learn from your mistakes
Personal financial planning activities
Each day you make tons of decisions, several which are quite simple, others have few consequences. There are those that have complex and long-term effects on your personal and financial situations.
Personal financial activities involve three main decision areas:
Daily living expenses, major expenditure, recreational activities
Future financial security, pension schemes, and investment vehicles.
Providing local and global assistance to those in need/ philanthropy.
In personal financial planning, you manage your finances to realize personal economic satisfaction through planning. Through a comprehensive budget and quality of life, individual satisfaction is enhanced by reducing uncertainty about future needs and resource requirements. You are also advised to possess multiple streams of income in case one fails; you’ll still have another income stream to cater to your needs.
Advantages of private financial planning
- Increased effectiveness in obtaining, using, and protecting financial resources throughout your lifetime.
- Control over your financial affairs by avoiding excessive debt, bankruptcy, and dependence on others for aid.
- Improved personal relationships, resulting from an honest plan, effectively communicated financial decisions.
- A sense of freedom from financial worries obtained by looking into the long run, anticipating expenses, and achieving your financial goals.
Your journey to financial independence is going to be tough; having an honest, realistic plan can, however, make things a bit easier. Therefore, having a good financial plan to succeed with your finances is extremely important.