Article Written by Sherin Dev; Follow me on Twitter Friends, do you know the amount of money people spends as commission to financial planners each year to design their personal financial plan to lead financially sound life? It would be more than the total budget of some European countries! If you are the one among them, who spend lots of money to professional financial planners, you probably have received below eight advices, if you had approached a right financial planner. Yes, today, I would bring your attention to understand eight core points which turn people to financially stable and sound life. Moreover to just read and move from points to points, after each of these points, take little time to assess yourself to understand where you are standing in your life, based on these points. Does you have right financial plan in picture? If yes, is it going to the right direction with a fail proof structure? If not, what best you can do to tune it in a fantastic way? Take a note of all questions reaching to your mind while reading each of these sections to work on the basis each to get right answer and knowledge. Before you move to next point, identify whether you are comfortable with previous one. If you found you have not completed the required as per any of the below points, bring a piece of paper and pencil to draw a neat plan to ensure you have not failed with any these points. Here are those eight points which would light up your life to a healthy financial plan:
– Living in Budget
Are you living in a well planned, perfect budget? Are you a strict follower of your monthly budget? As the startup, check whether you have a well planned, working, monthly budget in hand or not. If you have one, assess whether it meets all the requirements or not. Assess and note each resource where you are getting money and where it is going as expense. Moreover to that, identify the awareness of your family members to the budget and how comfortable they are to follow the budget. Once if you haven’t prepared good monthly budget, start your workarounds to prepare the same now itself. Draw your income from all possible places and all regular and unexpected expenses in a sheet of paper. This would help you to identify and eliminate unnecessary expenses to save lots of money at the end of each month. Once you start follow this practice, next is to enhance the budget time to time by adding and removing various elements from and to. Remember, having a good budget in place and living in it is the primary step to the financially sound life. It is of course, the first advice you are going to get from any qualified financial planner. Creation of a budget is not hard once you have understood the real idea behind it. So, prepare your budget now, if you don’t have one. Check, re-check and fine tune it to eliminate any possible errors. Once have done. It is your time to move ahead to the second point.
– Having no Debt Any Way
Debt is the biggest enemy to financial planning. Thus, debt management should given utmost priority into the financial planning. Any person who pays more than 65% of his monthly income to clear the debt, considered with huge debt trap. One of the best financial planning advices here is, never start your investments or money saving steps if you have debts. Instead, work hard to eliminate the debt first. Once become debt free, move further to your personal financial planning process.
Identify the most dangerous debt in the basis of interest rate. Prioritize and work to eliminate one by one. Tighten your budgets to pour maximum money to kill each debt gradually. Start your home work right now. Identify your debts based on its interest rates; prioritize it in a piece of paper. Bigger interest rated debts should come at the top of your list to eliminate first. Identify possible money sources and start pumping money to eliminate the debt one by one. Yes, clearing off debts is a time taking process. But, you should follow it any way. Or else, any of your invested capital along with its earned profit finally goes to pay off the debt! Here is a fantastic article for your reference.
– Precaution to Meet Emergencies Emergencies are situations that cost you money by come as unexpected! This can happen to anyone including your family members. To lead financially safe life, you should be always ready to meet such situations. One of the best possible options to deal with such emergencies is creation of a sufficient emergency fund. But is that alone sufficient to all? Creation of emergency fund could protect you from emergencies that come whenever you are alive. If you have died, your family members would be in trouble. To meet such situations, take the best possible option by getting protected with sufficient insurances. Self, family members, vehicles, assets and belongings all should be protect well with sufficient insurance covers. It is the time to take a home work. As usual, take a paper and write down the details of your emergency fund, insurance details to you and family etc. Next, assess whether you have protect each and everything through sufficient insurance covers. If not, prepare for a plan to get protected from up and down and from all the sides to confidently deal with any kind of emergencies. Once have a plan, go ahead for your insurance needs. Come back again to the next step once you have done.
– Identifying Your Financial Goals
We are reaching to the core side of financial planning. We are starting the financial planning through identifying financial planning goals. Goals can be short, medium or long, depends on person to person. Some of these goals I have generally found is, higher education of kids, build a home, holiday, buying a car, kid’s marriage, retirements etc… Remember, anyone can set goal. You don’t be the one in that group. Your plan should be very realistic and possible to meet. Without a goal, whatever you do finally come as a big failure. Never run blindly without knowing the finishing point. Here is the core of family financial planning.
– Right Investments
Getting knowledge on investments and investments instruments are really easy. But, combining them to meet particular goals is really difficult. Friends, at this point, my best advice is to take advice from efficient financial planners.
– Utilizing Resources and Skills in a Better Way
Any person who moves with any plan should assess his capabilities and weaknesses prior to the start. This would help him to identify whether is he able to meet the goal or further preparations required. You should be the one such kind. Understand your skills in a better way. This would help you to identify right paths and meet your goals better than others who moved with less preparation. For a better example, you can utilize your skills and resources in a better way to create more income than your regular income. Skill based part time job, business etc… Read this 3 way income suggestions
– Teaching Kids on Money
It is just a title. But, if you are the chief of your family, and the main head of financial planning for you and family, it is your duty to ensure each of your family members including your kids, have good awareness on money and how to manage it efficiently. This knowledge help you a lot to save more money. Here is a reference.
– Knowledge as Frugal
Remember every action in a family directly or indirectly related to money. Identify the sources where you can apply regulations and habits to save money. People can save lots of money on electronics, electricity, water, shopping, banking, households etc through using it properly. This article could help you a lot in that.
Once you have completed each of the above sections, I am sure; you are ready to a stable financial life. Reference and advices can help a person to an extent. Final success always depends on person on how he works and how serious he is. My best wishes to each of you who have read my own story.
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