Every single adult in every single household has a financial plan. They may tell you that they don’t, but if you have any kind of hopes and dreams, you’ve got a financial plan in front of you. The idea that one day you could be a homeowner? That’s a plan in the making. The Saturday spending spree that you’re looking forward to going on? That’s also a financial plan. Any time that you want to achieve something by spending money, you’re creating a financial plan. It may not be with a bank or on paper, but it’s a plan that you have for your money and it’s important to recognise this.
Having savings is a huge deal considering the number of households that do not have any savings in any shape at all. You can research the best credit card deals out there to save you in a pinch, but unless you have some savings started, you’re going to need to plan better for your future. With that in mind, there are some golden rules for your future that you should consider, and we’ve got five golden rules of financial planning below:
Always spend less than what you earn, because without that wiggle room, you will always be strapped for cash. Live on less than you earn, and you will be able to save more money than you expected.
Debt shouldn’t be hidden away from. Burying your head in the sand about debt only makes it worse. Contact your creditors and work out a financial plan with them. organise your debts in order of expense (including interest) and work on paying them down in that order. Clearing as much of your debt as possible should be your priority.
Cash is the best thing to keep hold of. You need a surplus of cash for emergencies. Having a savings account purely for emergency funds is a smart thing to have. If the boiler breaks down or you get stuck in another country, you need cash to see you through. The rainy-day funds must not be touched no matter what, so that you can keep your regular finances on track.
Keep an eye on your cash flow at all times. Scrutinise the way that you spend your money, so that you can learn where you can make the right changes. Work out the expenses that you have that are not essential so that you can scrape together your savings properly. Don’t wait around for your money to grow on its own; you have to make it happen.
Set goals and budgets. You can’t plan your finances without a goal. Having a budget for yourself means that you can work out how you can save your money better and learn where you should aim your efforts. You can meet your goals better this way.
Taking the time to understand the plans that you have for your future will help you to go a long way to making those plans a reality.