Guide To Personal Finance Planning For Dummies

Guide To Personal Finance Planning For Dummies

Early lessons in personal finance planning often start with first piggy banks. Parents or guardians teaching children about saving their money in their piggy banks is often one of the easiest ways to instil a culture of saving at an early age. In recent years, the piggy bank evolved into an actual bank account, where children can actually see their money growing, making personal finance planning much simpler. 

Even if you didn’t get this early lesson in handling finances, you can still learn about personal finance planning – it’s never too late. 

If you want to gain control over your finances, you should do what it takes to start as early as possible. As soon as you realise that your finances are out of control, you need to change your financial behaviour in order to course-correct. The sooner you start implementing changes, the better. 

Take advantage of the power of compounding by saving and investing as soon as possible. If you start saving as a 20 year old, you’ll earn more interest, compared to starting at the age of 35. 

Saving should be prioritised. Consider deducting your savings first, then paying expenses. By paying yourself first, such as automating payments of 10-15% of your earnings into your savings or investment vehicles, you will benefit more. 

Budgeting is an important aspect of personal finance planning. Monitor expenses and stick to your budget no matter what. Have a clear plan and set yourself attainable goals. 

Avoid accumulating too much debt. Only borrow when you absolutely need to and when you know that you can afford repayments. If you do need to borrow, do it with the intention of using the funds for investing, such as with a home loan. Your debt should bring you returns in future. 

Get insured. If you own a car, get it insured and protect yourself financially. You can get customised plans, which can result in you saving some money. 

Get a will. Prepare for the financial future of your loved ones when you are gone. Detail your financial investments, along with who you would like your beneficiaries to be. 

No matter what, keep in mind that you can always ask for help from trained experts, making your personal finance planning much simpler.

Categories: Financial tips