Hey! Have you dream of owning a car, a house, a child attending a prestigious college, or building a healthy retirement corpus. But you don’t know how to achieve these goals? Don’t worry, as here, we have given you the best financial planning and analysis tips which will help in personal finance management.
Well! You are not alone as there are around 70% of people in the world who lose their money due to not having a personal finance advisor. They even don’t know the proper savings and investment process for long term investment or strategic financial management in life!
Don’t matter how much you earn in your life, you can make these goals true and also secure your family from all worst conditions just like (Covid-19 pandemic situation).
According to financial expert and self-made billionaires; “IF YOU DONT MAKE MONEY BY YOUR MONEY, YOU CAN NEVER BECOME A RICH PERSON”.
What is Financial Planning or Financial Management?
- 1 What is Financial Planning or Financial Management?
- 2 What is the best process of financial planning?
- 3 How to Develop & Analyze a Better Financial Plan?
- 4 Top 5 Financial Planning And Analysis Tips To Live a Tension-Free Life
Financial planning and analysis is not just an investment and calculates the returns. But it allows you to create several funds that will help you to achieve your desire. Consistent investment in dead funds helps you to handle the worst condition which can come anytime in your life without knocking on the door.
Balanced savings and investment give you financial freedom in life. Also, it helps you to keep the eyes on all income and expenses to manage it properly.
Recommended: Top 4 Benefits Of Investing At A Young Age
What is the best process of financial planning?
Your present scenario is based on your current personal balance sheet. However, the money management skill linked to your financial goal will decide, where do you want to be tomorrow. Better money management plans will help you to give consistent growth to achieve your goals.
How to Develop & Analyze a Better Financial Plan?
It needs consideration of various factors;
- First, you need to decide your goals or a purpose for investment.
- Time plays a critical role in returns on your investment. So you need to understand that the ability to absorb risks are higher in long term financial investment.
- The inflation rate is directly proportional to your returns after the maturity of funds. For instance, In 30 years, Rs.10,000 would be Rs.45,000 as per the current inflation rate of 5% per annum.
Personal Finance says: ‘Pay yourself first ’. It simply means that out of your monthly income, a certain amount has to be saved before it is spent.
Top 5 Financial Planning And Analysis Tips To Live a Tension-Free Life
1. Keep A Record Of All Your Income & Expenses
There are several free applications available online to track your earning and expenses. You can also maintain a personal balance sheet using MS excel to track all your expenses. It is a simple thing but will make a huge difference in your financial planning and analysis.
2. Make Small Changes In Your Shopping Activities
- Look at your shopping bills instead of throwing them aside and make sure to cross-check all the items listed on your bill.
- Prioritise your bill payments, investments and other funding plans rather than throwing the money on “Fun” spending just after getting the salary.
- You must not ignore the small expenses as it gives you signals about what spending habits are working against you.
- Monthly subscriptions services are easy to forget, so you must note them in a diary. Accordingly, try to discontinue the services that you aren’t actually using and pay note down the payment date for essential subscriptions.
3. Detach Yourself From Things You Don’t Need.
Following the best goals of financial management doesn’t mean that you have to cut back on everything. Better Financial Planning is about reevaluating priorities where you should expenses your budget wisely. And avoid purchasing such goods or services which are not needful in your life.
4. Actively Boost Your Income
As the inflation rate is changing drastically, you need to find all the possible ways to increase your income from multiple sources. Apart from doing a 9 to 5 desk job, you can also use your skills to actively boost your income utilizing your free hours.
5. Start Investing In Appreciating Assets
- Savings: You need to keep some liquid funds in the bank as savings to cover any sudden financial need. Bank savings will not grow your money but they will help you in an emergency.
- Investing: You should start investing as early as possible with small amounts in mutual funds, bonds, stock market or other authentic money-saving plans . These investment planning are necessary to grow your money to achieve your goals in the short as well as long term.
- Financial Protection: You should buy health insurance and some investment policies. It gives protection to you and your family against the hard times just like the Covid-19 pandemic or any sudden critical illness. Read more, Why Is Life Insurance Still Needed In 2021?
- Tax planning: With proper tax planning, i.e. making expenditure/investment, you can bring down your taxable income, with good tax planning you save a lot of money every year.
- Retirement planning: Finally, retirement planning is crucial to ensure that you have enough bank balance meant solely for your needs during the old age years.
If you don’t know where to begin, then start creating a liability list by prioritizing the needs. You can also consult a nearby finance advisor or get aware of money-saving tips shared by fund managers or financial experts. You can even experiment by investing in multiple sources of funds to get the benefit of making money by your money.