FINANCIAL PLANINIG, ANOTHER WAY TO MANAGE YOUR EXPENSES

Money is difficult to earn but it can also speedily disappear if expenses are not managed wisely.

For people who are living independently for the first time, the responsibility of paying for their utilities aside their personal expenses can be burdensome if not managed appropriately.

Professional say the effect of inadequate financial planning may not be felt immediately, but later when there is no steady source of income. They note that understanding how to manage finance will not only help people out personally, but can be of benefit when it comes to business success as well.

A proper financial understanding, according to expert, also helps in setting goal as well as creating fundamental skills in planning and decision making.

Learn financial management.

Every business owner must have at click of mouse, his company’s key financial data such as value of receivable, current inventory level, monthly revenue, monthly profitability, business net asset and balance sheet among others. He says if you are a business owner and you cannot provide these data about your company in minutes, then you have some work to do. ‘Even if you decide to employ an Accountant or Outsource the finance function, it is still essential for business owner to have fair knowledge of finance.’

Stick to your budget

Expert says budgeting is a means of balancing expenses with income. To make it work, they advise that a realistic budget should be developed. According to them, budgeting can be best achieved by tracking how well it is being adhered to each month, which means a continuous tracking of your monthly expenses, coupled with your day- to-day spending.

As part of an effort to adhere strictly to the budget, they advise that people should think in term of their overall accomplishment rather than something that will give them temporary satisfaction.

Control impulsive spending

Impulsive spending according to experts is an act of spending money on items that were not in the original budget. Experts say people who are in the habit of overspending on items or making late payment for the items bought, frequently borrow money from friends and buy things they don’t really need.

Financial advisors also say stress often leads to impulsive spending. Therefore, they recommend ways of reducing stress as a remedy to impulsive spending.

Have an emergency fund.

A specific amount should be set aside for emergency situations because it is when unforeseen expenses or emergencies arise that people tend to spend out of their budget. This can be inform of budget out of  the monthly paycheck for deposit into a savings account, ideally at least 10 percent of each month wages, including extra money earned.

The advantages of doing this is to prevent the necessity of going into debit, it provide peace of mind and freedom of choice.

Explore insurance policies.

Insurance is an important tool for protecting against financial hardships, and the premium paid maybe one of the top household expenses. Interested parties should seek a provider to be sure  they have the appropriate level of protection- that way they will prevent exorbitant payment for coverage. Insurance policies include life and non life insurance. The details of these policies will be discussed in my subsequent posts.

Have a retirement plan.

Having a solid retirement plan, can erase worries and fear related to old age, and keep people in control of their life and their finances. They say it is an act of preparing now in order to enjoy later.

The retirement plan should include social security, medical insurance, pension scheme and good life style choice.