The Best Financial Planning Advice For Beginners
Many people are looking for ways to plan their finances and investments. There is too much financial planning advice out there. As such, beginners might feel a little overwhelmed by the information. Well, here is the best financial planning advice that any beginner should consider if they want to fare well in the current economic market.
1. What Do You Hope To Achieve?
A solid financial plan from a top renowned company such as PPS Financial Planning should be designed with objectives and goals in mind. You need to ask yourself what you hope to achieve at the end of it all. For instance, do you want to plan your finances to create more investments? Do you hope to have a large chunk of income by the time you retire? Are you hoping to clear your current debt? Figure out what you hope to achieve and create the best financial plan based on this.
2. Do You Know Your Expenses?
You need to have a proper list of all your expenses every day if you want to create a good financial plan. Keep in mind that it is tough to track cash so you might miss out on a few expenses. That’s why debit and credit cards are recommended. You can use these to track and organize all your expenses effortlessly. With such information, your new financial plan will be easy to follow.
3. What Is Your Net Income?
Before your retirement, regardless of your age, you should always save as much money as possible. When writing down your monthly income and expenses, you should have a clear account of your total net income. It is the amount you have left over after your savings. You should aim to save at least 15% of your savings every month to get a good sum by the time you have to retire.
4. What Are Your Monthly Fixed Costs?
Since most people don’t have the option of making more money, it is prudent to identify your monthly fixed costs. For instance, you need to account for rent, utilities, car charges, loan deductions and much more. With an idea of how much are your fixed costs, you can work your budget around the fixed cost effortlessly.
5. Do You Have Different Bank Accounts?
Most people assume that having different bank accounts is hectic. However, having a single bank account makes budgeting and planning very hard. You should set your budget to 5 categories and set up various checking account for each category. As such, you will have an easier time identifying the total amount leftover in your budget without necessarily number crunching. You can do this by checking the final balance on each account by the end of the month after paying your expenses.
6. Have You Considered An Investment Account?
Budgeting is tough and it is not the easiest thing to do for most people. Well, you can keep it fun and simple. Start by transferring a small percentage of your money every month into an investment account. With the mindset of investing in your future in property or other options, you will not get the money back into your checking account to spend it.
7. Learn Self-Control
If you want to be more conscious about your money, you need to learn about delaying gratification. Yes, you can buy something on credit when you want it. However, you can save up the money and get it with cash. Ask yourself whether you need to bother with the interest when you can wait a little longer and avoid it altogether. It is the best way to keep your finances in order.
8. Start Controlling Your Financial Future
If you don’t learn how to manage your own money, you are likely going to find people who will mismanage it for you. They are often malicious and will take as much as they can and leave you hanging. On the other hand, you might get good financial planners who might not have an idea of what they are doing. Therefore, if you don’t want to rely on help from other people, you need to start controlling your future today. With the right financial advice, you can’t let people catch you off guard.
9. Do You Have An Emergency Fund?
If you don’t have an emergency fund, it’s time to start one today. Financial advisors always tell their clients to pay themselves first. Therefore, no matter how much you have in debt or how little your salary might be, you need to find some money and save it for an emergency.
Having money set aside in an emergency fund will keep you out of a lot of trouble. You can actually sleep much better at night. When you start saving money properly, saving a little for your emergency fund will become a fixed expense. Soon enough, you will have retirement money, pay for a good vacation or buy a home.
Find the best investment option for this money rather than storing it in your mattress. You can look for a savings account with a high interest rate. Failure to do this means that with inflation, the value of your savings will be completely eroded.
10. Do You Have A Proper Grip On Your Taxes?
You need to know how income taxes work if you want to work hard to save your money. For instance, you need to know whether your salary is enough to cater to your financial obligations even after deducting taxes. You can take advantage of any of the online calculators to determine your income taxes.
Hiring A Financial Planner
With these basic tips, you know how to start planning for your financial future. However, if everything is still overwhelming, the next bet would be hiring a good financial planner. Of course, you shouldn’t hire the first person you come across without checking their credentials.
Start by checking their background, experience and reputation in handling other people’s finance details. Talk to their clients if possible, to find out if they would recommend the financial planner to a new person. With an expert like this on your side, you can count on a solid financial future effortlessly.