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.
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