Personal financial planning is about meeting personal financial goals, whether it’s meeting short-term financial needs, planning for retirement or saving for your child’s college education. It all depends on your income, expenses, living requirements and individual goals and desires – and coming up with a plan to fulfill those needs within your financial constraints.
But to make the most of your income and savings it’s important to become financially literate, so you can distinguish between good and bad advice and make savvy decisions.
The sooner you start your personal financial planning the better, but it’s never too late to create financial goals to provide yourself and your family with financial security and freedom.
Here are some tips to get you started on Personal Financial Planning.
- Spend less than you earn.
- If you’re facing a pile of debts, make minimum payments on all of the debts but the one with the highest interest rate, then make the biggest payment you can each month on that high one.
- Never expect that your “future self” or anyone else will bail you out of your dumb mistakes today and remember that only you can make better choices for yourself.
- The quickest way to financial recovery is to get a grip on your spending impulses.
- Life is going to hand you emergencies, so keep at least $1,000 in your savings account for those emergencies.
- Be completely open with your family about every single dime that comes in and every single dime that you spend.
- Buy items that will last for a very long time at the best possible price and you’ll rarely be unhappy with them.
- If your employer offers matching on your 401(k), take as much of it as you can get.
- When you’re deciding how to invest, remember that past performance does not indicate future returns and focus instead on the fees and expenses.
- If you have dependents who rely on you, you ought to have life insurance, but ignore any salesperson who tries to sell you anything other than a term policy.