Personal Finance Planning- It Is Never Too Late
It is important that each one of us dedicate our time to knowing where and how we should save up for the future. While the woman of the house manages her monthly budgets, the little kid(s) of the house manage the Piggy Banks (where there are only deposits and no withdrawals!).
While conceptually, what is important in personal financing is that an important chunk contributed towards insurance (nobody wants it but we all need it!), what is critical in the current scenario is retirement planning. What is required is you sit down as a couple, chalk out a plan for your future, understanding your current circumstances (money that is!). Knowing your priorities and understanding what will be non-negotiable needs in the future will give you an idea of what you need to save (or how hard you are going to have to work in the coming years!) to achieve them.
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Some tips that you can use to start immediately are as follows:
Learning to control your finances: If you do not have absolute control over your own money, people will find ways and means to misuse your money. While some may be out to cheat you, some may not know what is best for you or about investments. So, firstly do not step out for advice. Take control and read up some book on personal financing. In addition, talk to friends and family if they are investing or using certain services which can be recommended.
Budgeting: It is vital that once you have started this process, you need to really understand your earnings and expenses. You do this by observing and noting down the expenses. This will give you an idea of what can be restricted. In addition, this will indicate what you can save up every month. If there is a determination to save money, you will find ways and means to do it. You will be surprised how your coffees and eating out can put a dent in your pocket. Once you keep a track of expenses, you can very easily start controlling the same.
Funds: It is very important to pay yourself every month. Call it an emergency fund or a saving towards the future, either ways you need to put away an amount from every month’s salary. The amount does not really matter. It is more about getting into the habit of putting away some money for when you really need it. This money should be put in some savings account with a high interest rate, mutual funds (these days you can find the mutual fund that suits you quite easily. There are various sites which will provide a detailed analysis of them and whether it will suit your purpose). Make your money work for you by investing it as inflation can really make just storing it pointless.
Retirement and health: Start your retirement planning now. It is never too late or early to start putting money away for when you will need it the most. With time, you will need more than what you think you will need. Look at diverse options that are available for retirement planning. Sometimes, the easiest option will be the company sponsored one. Here, you will have the advantage of employing your pre-tax money and this will ultimately benefit you. Also, most companies will match your contributions and such an option is great because it is like getting free money. What cannot be emphasized enough is to take care of your health while taking the necessary insurances. This can also be done by comparing the many options available online. Competition between these insurance companies is good for people like us who can save money and get the benefits we need.
If the future is unpredictable, make it as easy as possible for you to deal with that uncertainty. If you have a family and intend to start this process of planning your finances, make it a topic for discussion at the dinner table, so the kids also understand and they start early. A simple exercise of jotting down all major and minor expenses and incomes (separately) over a period will give you a fair idea. What I cannot stress enough is that a couple should have equal knowledge of where the money is invested, the passwords, and the formalities involved in accessing your hard-earned money.
Make your money your personal business! Start your Planning now!