Personal Finance Planning – 8 Easy Steps

What is personal financial planning?

Personal finance planning is well defined in an organized manner and management of your finances such as your cash flow, your loans, your insurance, your asset allocation, text planning, etc in a detailed manner.

Why is personal financial planning important?

Personal finance planning becomes far more important in terms of future aspects as well as in your present aspect too. Let’s have a look at the given points below 👇🏿

• It secures 🔐 your future.
• You become more aware of your money management.
• You start avoiding unwanted spending or so-called emotional shopping. 🛒
• You will start learning more about money and finances.
• It gives you self-confidence and belief that your upcoming journey will go smoothly.

How to do personal finance planning?

Many people think that personal finance planning means lots of paperwork and lots of things we have to do. No that is wrong you don’t have to do that many things. Personal finance planning should be as simple as you can so that you and your family don’t get confused with your planning and with lots of paperwork.

1. Cashflow

Cashflow or you can say savings you have to have at least a good amount of money so that you can be financially free for that you have to save at least some amount of money from your salary or your income source whatever it can maybe that’s why saving is much more important.

Make sure that you make a rule that at least you will save 10% of your income for your future so that you can have a good amount of money.

2. Loans

Try to clear all the loans or at least minimize the loans so that you can invest or have some money for yourself. It’s okay if you have home loans but try to pay the rest of the loans and clear it out as soon as possible so that you don’t have much tension on your head that you have lots of loans pending so don’t do it and don’t take unnecessary loans if you don’t need that particular thing.

3. Insurance

Many people think that insurance is a waste of money no an absolutely stupid mindset. Why do you think like that tell me one thing why do you have a back cover on your cell phone you will say that if a mobile gets fallen or something happens back cover will save the phone right?

Tell me the cost of your mobile phone might be $500 or whatever it can be if you have fear of damaging your phone anyhow you do it okay. So tell me what is your value I mean it’s countless okay it’s precious so why you are taking your step back from insurance?

This is more important for you and everybody. Simply, you don’t have to have lots of insurance that’s all rubbish you simply you have to have only 2 insurance the first one which is health insurance and the second one which is term insurance and that’s it nothing else you don’t have to have extra anything on top of that.

4. Investment planning

Investment planning is very very crucial you have to understand I know you save lots of money or you don’t save any of that okay but from today onwards you have to first save your money out of that you have to invest money.

Don’t try to think that as soon as you invest you will double your income within one day or one week or one month. That is so so wrong way of using your money try to use it in a proper way you want to grow money grow your money by investing in the stock market or bonds or anything which you think that on that you can grow your money don’t get into the trap of gambling and betting.

5. Tax planning

Many people think they will have to pay lots of Taxes and government does nothing for the common people but this is not the truth. You can say that you are not aware of that tax advantage that the government has given to their common people you have to go through it in that case, you will have to know about tax planning and finance so that you can legally save lots of Taxes for example section 80 c many people can save lots of money.

You have to be updated so that you can take advantage of saving money properly.

6. Educational planning

Educational planning becomes very important because of the inflation rate and things are becoming costly day by day that’s why everyone should plan educational planning prior because earlier day education planning was so simple to make and easy to follow.

But the scenario has drastically changed in the meantime which is why education planning can cost you a good amount of number. One should plan their child’s education planning very well so that in upcoming times they don’t have to get panic or take loans from any other people or banks for their child’s education.

7. Retirement plan

Whether you are in your 30s or 40’s you should keep in mind retirement planning is the most important part for everyone you can’t live on any other than he or she will take care of you.

No don’t rely on others. Don’t know what will happen in the future for safety you have to have a good retirement plan so that you can spend the rest of your life in enjoyment not in sorrow complaining about this and that. No, don’t rely on others.

8.Net worth

Try to know your net worth whether you are in your 30 or whatever let’s say you are in your 30s and you will leave up to 80 years ok. So you have to have some number in your mind you want so that you can happily rest your life without having the headache of doing work for money. According to that, you will plan all the things so that you can happily live your life.

Is it necessary to do personal finance planning?

Yes, it is necessary to do financial planning because not everyone in the world has born rich or a millionaire that’s why everyone has to do personal finance planning properly if you don’t know how to do personal finance planning you can contact any financial advisor who is smart 🤓 enough and capable to tell you right things about how to plan financially. But you have to do your personal finance planning.

FAQ’s

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