Financial Planning tips
Whatever plan you make for the future depends upon your today's financial goals, career perspective, dedication and consistency. Taking control of your finances begins with thinking about your goals and deciding what matters to you. It also includes how you manage your money through savings, investments and how you manage your expenditure. Accordingly, one step towards having a stable financial future is to build a deep knowledge of your finances. One must make a change in their spending habits and plan budget and income before they fall too deep in a financial crisis. Every person must devote time to improving their financial knowledge to have a secure future. There's a saying that "why to think negative, we must always be positive " yes, optimism is usually defined as a belief that things will go well. But sensible optimism also includes being prepared for the worst that can happen.
Being good at finances is all about understanding and acknowledgement. Whether you're new to staying on top of your finances or need some fresh inspiration to grow your wealth, you must be updated with information, tips and ideas to get a better hold on your finances.
7 timeless rules of financial planning are :
- Save at least 10% of your income:The first and foremost step of financial planning is saving. Savings can be created by spending less, and you don't need a specific reason to save you can save just for saving's sake. And indeed you should, even everyone should. The more money you have saved, the more you control your destiny. if your job has you on the verge of a nervous breakdown, you can quit even if you don't have a new job lined up yet, If you get sick and need expensive healthcare that your insurance doesn't cover, you'll have a way to pay for it even though you can't work while you're getting treated.
- Never rely on a single source of income Warren Buffet once said "Never depend on a single income Investment". An individual should never rely on a single source of Income and the reason behind this is that if the odds are not in your favour then at least you have a backup and invariably increases the total cash inflow and your net worth. A raw increase in income is not going to help you as much as multiple income streams. This is a faster path to wealth.
- Never increase expenses with income: Spending less on everyday expenses is necessary, everyone needs to customise their spending categories and have well-defined financial goals. For regular, unavoidable expenses. It is better to fix a limit so that they do not go out of control. There's even a saying -two third of our net income should be used to service debts, and our savings should be at least one-third of our net income.
- You need to develop a money mindset: It's not your salary that makes you rich it's your spending habits, your unique set of beliefs about money. Your friends can't make you develope money mindset. Neither your parents can make you care nor your spouse, but the good news is you can! So just get into the process.
- Don't go broke trying to impress others: Social media, overexposure and fake show off has created a false sense of competition and the effect of this goes beyond an emotional and psychological one. It's affecting your bank balance too. you know what if you have the money you purchase a nice car to have a false sense of belief that people will call you smart and cool, but rarely do we notice the guy sitting in the car, Instead, the reality is we think," Wow, If I had that car people would think I am cool".But the reality is more than people admiring your wealth seeing your luxuries they see it as a benchmark for their desire to be liked and appreciated. So just don't go broke in purchasing things which are rather than showing you are wealthy and cool, make you bankrupt instead start investing in income-generating assets.
- Avoid bad debt at all costs: Don't be a byproduct of debt. Quit hustling backwards. Stop celebrating debts of car loans and all. That's the irony that for taking a loan, everyone congratulates you and when you invest in the stock, everyone tells you it's "too risky".So just avoid bad debt as much as possible.
Thus, above were the points implying which will sure that you are making smart decisions. so imply these points in your life as early as possible because rather than learning from mistakes and wasting time, you will be ahead because of your wise choices.
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