Financial planning is a skill everyone can benefit from. However, if you don’t already know what you are doing, it can be difficult to get started.
I talk a lot about budgeting and smart ways to save, but it is so financial planning is so much more than that.
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I have invited guest contributor Jackson Maven here today to share his tips on how to effectively financial plan.
A lot of buying and selling goes on in our day-to-day activities, which makes money a big deal. One of the best things you can do for yourself is strengthening your finances, so you don’t end up surviving on debt consolidation, which can be a little frustrating eventually. Managing your finance comes with its own challenges, and even greater for freelancers and entrepreneurs without a stable source of income. Getting multiple streams of income that are subject to change can get your finances in a mess if you aren’t careful. But the good thing is that you can still work towards it not crashing and be happy with your finances in the long run.
Below are a few financial planning tips to help strengthen your finances:
Build adequate protection:
You can’t always predict the outcome of life. One minute you could be totally satisfied with your income and expenses and overall financial state and the next, you might be totally wrecked if care is not taken. To avoid this, it is best to have adequate protection by first identifying how much protection you need for either yourself or for your family. Once that is established, you can then work towards buying it through the right means. Insurance and investments help greatly in protecting you from future disaster. This could cover basic but essential areas like health, disability, and home. You need to know how much protection you need, and then work towards building an adequate one.
Be financially literate:
Everyone who makes and spends money should be financially literate at all cost. Know the basics, at least, and gather enough information as regards finance that you will need. Before making a financial decision, it is important to educate yourself, so you don’t ruin your entire finance life. Check out blogs, newspapers, websites and even online communities to get adequate info, and you can be sure that you won’t make any silly mistake. Read extensively on what you intend to decide on, so you don’t make your decisions based on ignorance. Also, remember to get the help of a professional where and when necessary.
Cut recurring expenses you don’t need or use:
Always run a check on your bank and credit card statements to see what you spend your money on and how you can cut it. You might sometimes realize that some of these expenses aren’t worth it and are just sucking up your money for nothing. Or you could realize that you don’t need as much as you spend on. Once you discover this, you have to find a way to cut it down to fit into your budget and not go into excesses. Online services or smartphone apps like Mint can help you check how you receive and spend your money so that you can see your expenses.
Take out things you have stopped doing or that you do not value anymore. Common examples include newspaper and magazine subscriptions that you don’t read anymore and can be replaced by online magazines and blogs; the gym membership that you stopped using because you now exercise at home. It could also be as little as the coffee and lunch that is brought down to you every day when you can as well try to arrange something from home and not have to order every day. If you look well into your expenses, you will figure out what the excesses are if you are truthful with yourself.
Make sure saving goals are SMART:
Once you start saving with a goal in mind, ensure the goal is SMART. SMART is an acronym that means that the goal is Specific, Measurable, Achievable, Realistic, and Time-bound. If your saving goal doesn’t meet these criteria, you may have difficulty in achieving it. Estimate what the goal will cost and then calculate how much you will have to put aside every week or month to achieve it in due time. Also, be realistic with yourself and ensure you can meet up with the fixed dedicated amount to help you reach your goal.
Prioritize debt repayments:
Start paying your debt relief programs as soon as possible, and not wait for an unrealistic increment of a paycheck in the future. Cut down on the number of debts you get into, and try not to get involved in those that are unreasonable or that can be entirely avoided. Housing loan is an example of good debt, but you can’t say the same for party loans and other social outings. You will need to clear off your debts to be able to save for your life goals conveniently.
Eliminate spending temptations:
Cut down on every spending temptation that might put pressure on your finances. Ignore mailboxes with credit card offers and sales notifications, so you don’t keep on spending. Also, take your time to unsubscribe from store emails that won’t stop sending you updates on their newest products.
These financial planning tips, if maximized well, will help you strengthen your finance in the long run.
Focused on providing information for anyone in need of debt relief, Jackson writes a blog on debt settlement, debt consolidation, tax debt relief and student loan debt which helps to find the debt solution that fits their unique needs no matter the amount of debt they are in.
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