Managing finances for a family is a huge responsibility as it has to cover the needs, wants, and aspirations of the future. The balance between earnings and savings makes life different, depending on the decisions taken regarding finances while being practical.
While budgeting has a more significant role to play in finance, here I present a few factors that can make personal finance planning smooth. Besides, it helps me cater to all the family's needs yet save for the future and emergencies.
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Budget Rule:
An age-old budget rule of 50/30/20 works for all effectively. In the book, All Your Worth: The Ultimate Lifetime Money Plan, Senator Elizabeth Warren introduced the 50/30/20 budget plan, where 50% of the net income goes to living essentials, transport, and groceries. Thirty percent is allocated to other essential expenses though not on priority, such as dining out and shopping. 20% goes toward future expenses.
Emergency Fund:
We all know that the life we lead today may not be the same tomorrow. Life is all about surprises, and some preparation in advance is crucial. If it turns out to be on a good note, all is well, but if circumstances turn upside down, then we need to be prepared. One can handle unexpected expenditures only with proper planning of finances. It is ideal for keeping aside 20% of the monthly income as an emergency fund and plan life accordingly. It is wise to understand financial terms from finance knowledge centre.
Consider Family Preferences:
Each family needs are different and so are their needs. A personal budget is framed keeping in mind the preferences and choices of each member of the family. A good budgeting plan can lead to reach life aspirations and it aids in matching future expenses, spending, and prices is a priority. Proper financial planning leads to a positive family environment for the future.
Wise usage of Credit Cards:
Credit cards seem like a debt trap but play an important role in keeping track of expenditure, which helps govern the personal budget. One can keep their credits in check by paying the bills in a stipulated period. One should avoid Frequent use of credit cards and clear the bills then and there to enjoy a stress-free life. So, if possible, one should always vouch for credit-free payments as accumulated small purchases may disturb the long-term budgeting plan and stay away from bad credit loans, for more information check here.
Save for Retirement:
One should adopt a proactive approach to managing our finances after we bid goodbye to our services. Life after retirement should be peaceful and free from all worries. Financial planning leads to a stress-free life after retirement and should be started way before by setting small or long-term goals to drive economic growth. One can invest funds to match our particular goals to manage them precisely. These small steps of planning will reap the larger objective of life peacefully and safely. You can read the article by Senior lifestyle to understand more about it.
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Principles of Budgeting
Planning the budget has never been easy. Precise financial learning is vital to handling things correctly. One can even take the help of an expert or the budgeting apps to ensure that budget documents and data are open, transparent, and accessible.
Plan
The most crucial and primary step in budgeting is planning expenses and savings. One should actively plan, manage and monitor the budget execution.
Assess
Identify, assess and manage prudently longer-term sustainability and other fiscal risks. Ensure that budget documents and data are open, transparent, and accessible.
Re-plan
If the desired plan doesn't work out for some unexpected reason, one can work out other methods to manage the finances efficiently.
Final Thought:
Though we continuously work to earn a good living for our family, there are certain times in life when things don't go as we think. One should remember that there is no fixed method to manage our expenditure and savings. It all depends on many factors, and each one opts for its unique ways of planning for the future. Sometimes, specific plans do not implement the way we think they should. Nevertheless, one should remember that the present should be on top priority. Give yourself a break, and enjoy life as one learns from experience and time.
Personal finance is one such topic which needs to bet handled with care. If someone do not have enough knowledge about it then it is better to educate themselves. Tough times come without informing us and it is better to be prepared of it.
ReplyDeleteI am totally bad with financial planning and did not hold a credit card for that reason. I lose track of how much I am spending. But as the points you have shared will surely help me,. I am book marking them.
ReplyDeleteIt is articles like this that made me wake up to the need for personal finance planning and setting goals. Following these simple measures has helped me a lot in keeping track of my money.
ReplyDeleteThese are really important factors to ensure personal finances are smooth. Having a budget is the first step, and building up of a budget fund is vital. Sandy N Vyjay
ReplyDeleteBeing a Finance blogger and consultant, I've always emphasized on one thing that people skip out: Emergency Fund. And yes 50-30-20 budget rule works great for us.
ReplyDeletePersonal finance is definitely an important factor of one's life. I liked the 50/30/20 rule.
ReplyDeleteBrilliant article. I liked that budget rule & also other suggestions.
ReplyDeleteWill follow it for my better future. Hope I succeed.
These are some great tips to manage our finances with ease. I agree we should avoid the unnecessary use of credit cards as it puts an extra pressure in next months. also, saving for emergency and retirement is equally important to feel safe and secure .
ReplyDeleteFinance planning is an art. I struggle with it almost all the time. I read your detailed post and saved it for future. Among all the points, I believe having an Emergency Fund is most important. No one should cut corners on that.
ReplyDeletePersonal Finance Planning is important. I've been doing it alone since a long time. All these are important parts of planning. Moreover, I believe when it comes to credit card, one shouldn't start using it if they have no good plans of using as they might end up in debt. Plus your last point replan, that too is really important.
ReplyDeleteI totally agree with your tips, it's so important to understand how to save our finance and educate others too. I agree that we need to be vigilant and take care of unnecessary usage of credit cards.
ReplyDeleteThis topic goes way above my head. I do manage the monthly budget but saving and investments is just not me. Very bad with finances :(
ReplyDeleteI remember the first time I took a credit card, I was overspending so much. I wish I knew at that time, the importance of the right way if financial planning. This is a very helpful article.
ReplyDeleteManaging personal finance is a lot of effort but with right knowledge and planning one can ace it for sure.these give principles definitely help to plan the best.
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