When it comes to your finances, planning is the key. If you don’t have a plan, you’re more likely to make mistakes with your money — and those mistakes can cost you big time. Here are some things you should know about financial planning:
1. Start with your goals.
What do you want to achieve financially? Are you hoping to save enough money for a home deposit? Do you want to buy a new car in the next couple of years? Perhaps you’re planning a big trip overseas. Whatever your goals are, write them down and think about how much time you have left before you reach each one — six months, a year, two years?
2. Put together a budget.
Now that you have a goal in mind, think about how much money you’ll need to make it happen. If your goal is to buy a new car within the next year, for example, break down all of your expected costs — depreciation on the car, petrol expenses, and registration fees, as well as unexpected car repairs and replacement tires.
3. Keep your budget in mind when you make spending decisions.
If you know your car is going to cost $1,000 in registration fees and petrol this year, for example, it makes sense not to drive too far out of your way for a cheaper deal on groceries or fuel — even if it seems like a great deal at the time.
4. Consider investing in a couple of shares if possible, rather than putting all your money into term deposits or savings accounts.
While they’re not guaranteed to grow, you can get incredible returns from certain types of shares over the long term — and there’s no better way to secure your financial future than by setting yourself up for a healthy retirement.
5. Make sure you have insurance.
This is especially important if you’re young and don’t have many assets yet. If something happens to you and you don’t have insurance, you could be left with a lot of debt — or worse, no way to support yourself financially. Choose a reliable insurance company that will provide you with the best possible financial services and benefits.
6. Automate your finances where possible.
This will help you to stay on top of your budget by making it easier for you to stick to your spending limits. If you have a regular income, set up a direct debit so that a certain percentage goes into your savings account or investment portfolio each month, without you needing to worry about it.
7. Keep your receipts.
If you’re at the shops, for example, it makes sense to put the receipt in your purse or wallet if you think you might need to return an item. Even if you don’t keep paper slips, make sure to log all of your regular purchases using a phone app such as Expensify. This will help you pinpoint where your money is going and whether you’re sticking to your budget.
8. Don’t be afraid to ask for help if needed, especially when it comes to financial planning.
There’s no shame in starting small and investing wisely, as long as you’re putting away as much as you can, even if it’s just $50 a month. Talk to a financial planner to get started, or consult with your bank about the best way to save and invest your money.
9. Keep your eye on the long term.
While it’s important to plan ahead, you shouldn’t let yourself take too much risk with your investments. Instead of choosing high-risk shares that could lose money quickly, for example, invest in something that might not rise as fast but won’t drop either, such as blue-chip shares or real estate investment trusts (REITs).
10. Reward yourself occasionally.
If you’ve been sticking to your budget and meeting your financial goals, it’s important to allow yourself a small treat every now and then. This could be something as simple as going out for dinner with your friends or buying a new book. Just make sure that these rewards don’t break the bank, and that you continue to save and invest as much money as you can.
11. Finally, don’t forget to have some fun!
Saving and investing your money is important, but it’s also crucial to enjoy life along the way. Make sure you set aside some money each month for things that make you happy, whether it’s a night out with friends, a new piece of clothing, or a weekend away. Enjoying life is just as important as securing your financial future!
By following these simple tips, you’ll be on your way to creating a successful financial plan that will help you achieve your goals. So take charge of your finances today, and enjoy the peace of mind that comes with knowing you have a plan for your money.