How much you earn often matters less than how you manage your money. Certainly, some people face difficulties due to low earnings, but often the problem is associated with how well we plan. It’s not the most interesting task in the world, and many find it frustrating, however, it’s essential for your financial health and can allow you to plan and prepare for the future, both for the good, like trips and projects, and the bad, like emergencies that can require financial support.
Here are some ideas to understand financial planning and began implementing it as a best practice in your life.
Your needs change, so you need to keep planning
You might have a financial plan designed at some point, but usually, you need to update it. First, your plans change and you might want something you didn’t before or give up on something that is no longer useful. But financial planning needs to be something that adapts to your lifestyle, goals, and needs.
However, it’s important to avoid letting yourself be moved by trends or situations. Don’t buy something just because it’s fashionable or society tells you to. Instead, keep true to your financial plan and save money.
Avoid stuff you don’t need and don’t want
A key to planning is to cut down on unnecessary, impulsive purchases. The world is full of temptations, from sweet and salty snacks to “discounted” clothes or accessories. You probably know what your particular vices are. While the expenses might seem tiny in the moment, they add up and grow until they exceed what you can afford.
A good idea is to budget for these expenses in advance and always know how much you have to spend. Additionally, make sure that you are getting things in a way that works. It can be cheaper to buy candy bars in bulk, for instance, than spend on a single one every time. If there are treats you can’t resist, find ways to save on them. Also, always ask yourself if you want or need something. Delay your purchases and steer clear of one-click options. Instead, try to wait a day for a medium purchase, several days or a week for a large one, and an hour or so for small expenses, like a bit of candy. The goal is not to deny yourself joys, but rather to be more mindful and center your financial resources on where you want them.
Make a realistic plan
You probably won’t be able to survive on $5 a day, even if it would allow you to save a lot of money. Many people struggle when they don’t have any leisure, and planning for expenses that are not necessary but fun is also a big part of financial planning. There are times in life when we need to cut down, but it could still be useful to leave a little for leisure activities, fun and less nutritious food, or going out. If that is not possible, at least try to consider them for the future. Also, focus on activities that can help weather the most difficult times and seek out free or affordable options.
Saving and planning doesn’t need to be just dull or stressful. It can also be a way to afford better experiences and the things you want. So include them in the plan as well. But don’t forget your emergency fund!
Save for the emergency fund first. Then, begin focusing on other things as well.
Find the right way for you
Some people use apps. Others need financial consultants. There is no single right way to plan or budget. While all approaches usually feature roughly the same elements, like considering your income and expenses, the way to track everything could be different.
Don’t be afraid to use the right tools for you. Digital or pen-and-paper or even relying on someone else can be valid options for your situation. It matters more to get it done than to get it done in a specific way.
Plan in time increments
First, focus on establishing a general idea of how much you want to save by the end of the year. Then, consider how much you need to have in six months, in three, and in month as well. Set daily goals, weekly goals, and monthly goals. Always use a budgeting tool to keep track of your expenses and income.