Ten tips to a great financial plan
Being dissatisfied is the first step towards a successful life and therefore if you want ten tips to a great financial plan, I will first ask you to cultivate a dissatisfaction with what you have already achieved within yourself. However, make sure that it is the positive kind of dissatisfaction, which goads a person into having thorough look into his financial condition and consider ways to improve it. It is entirely different from jealousy, which actually robs one of all kinds of vitality. Therefore, the first tip is â€“ grow dissatisfaction about your financial condition, but remain positive. You cannot make any feasible plan without such positive attitude.
The next tip is already been discussed. Have a thorough look into your financial condition. You cannot simply go higher up unless you know where you stand. Consider your income and expenditure, the assets you have already created and income, if any from such assets, the liabilities that you have etc. Now consider, if there is any expense you can cut or liabilities you can give up. At the same time, saving a lot of money at the expense of minimum comfort cannot be considered as a great financial plan.Â
At the same time, terms like good lifestyle and comfort are rather relative. What you consider as a good and comfortable lifestyle may seem rather luxuries to me. Moreover, what you have hitherto taken as indispensable may seem rater superfluous right now.Â Therefore, your mindset count is an important factor and a change in your mindset can help you to manage your finance in a far better manner.
Now, let us start with budgeting your expenses. To do that, you first need to find out how much money is available with you per month. Such an amount may include your actual earning as well as income from your assets. Also, know your expenses. If you note down your monthly expenses for two or three months, you will have a fair idea about how much you spend every month and how much you can cut back to facilitate further saving without having much affect on your lifestyle. If that is not much, you will have find ways to cut expenses without causing basic disruption in life.
It is always wiser to put away a certain percentage of your income in the beginning of the month only. Divide the rest according to expense incurred every month. Many people make separate envelops for separate expenses. This helps them to know where they stand and if they have overspent, such an arrangement helps them to track it down. Also, create an emergency fund for unexpected expenses so that you do not need to borrow money at high rate of interest. Learn to do away with your credit cards and buy with cash as much as possible. Even if you use cards or take loans, never allow the interest to accumulate. Pay them on time.
Now, comes the investment part of it. There are two kinds of funds you can invest in. Some are very secure, but the return they offer is not very high. Bank accounts, government bonds fall under this category. Then there is the equity market, which may provide high return, but if the market goes down, your investments have a chance of being wiped off. Divide your money in such a way that both the aspect is well taken care of.
Besides, do not forget to buy adequate amount of insurance. While life insurance will help your family to ward of financial disaster in case of your premature death, you can also consider car and home insurance to protect your property from destruction and theft. At least do not neglect to get adequate amount of health insurance. This is vital.
Therefore, the ten most vital tips to a great financial plan are:
1.Â Â Â Grow dissatisfaction about your condition, but remain positive.
2.Â Â Â Go into details of your financial condition.
3.Â Â Â Know your expense and put it vis-Ã -vis total amount available every month
4.Â Â Â See if there is any expense you can cut without compromising much on lifestyle
5.Â Â Â Change your mindset about certain aspect of your life so that cutting back on expense does not seem like a compromise
6.Â Â Â Put away a certain percentage of your income in the beginning of the month
7.Â Â Â Divide the rest according to expense incurred every month and put tem in separate envelop
8.Â Â Â Create an emergency fund for unexpected expenses
9.Â Â Â Invest wisely, paying equal attention to growth as well as the security of the fund
10.Â Â Â Buy adequate amount of insurance for the familyâ€™s security