Are you in total control of your money? Can you account for every dollar and know exactly what you have in your bank account at any time? Don’t worry if you didn’t answer yes to these questions. Most people are not very good at personal financial management and would not be able to say yes either.
When you are not in control of your money then this can really stress you out. For example if you are uncertain if that purchase that you just made will compromise your ability to pay some upcoming bills then this can leave you in a very bad place.
We all face unexpected payments sometimes and this is just part of life. This can be a medical bill, a hefty service bill for your car because something went wrong, a family member desperately in need of help and so on. If you manage your money properly then you can minimize the impact of these unexpected events.
The good news is that it is not difficult at all to get control of your personal finances. It will take a bit of effort but it will make you feel a whole lot better when you have done it. You can make important decisions when you know where you stand so let’s take a look at some of the best personal financial management techniques that you can use.
What are your Financial Goals?
If you do not have financial goals then you need to think about what you want to achieve financially and write these down. A lot of different areas of your life have a financial impact so start off by writing down goals for the next 5 and 10 years.
If you want to own a home in an exclusive area then you need to break this goal down into financial terms. How much does your ideal home cost? What deposit will you require? What amount of mortgage loan will you need? Will your current income levels support this goal?
Do you have debts at the moment? A good goal to go for is to get out of debt as fast as you can. This is sound personal financial management. Maybe one of your goals is to retire early so you can enjoy more time with your spouse and family and travel the world. Just write all of your goals down as you will be using them to create a personal finance plan.
Good Personal Financial Management begins with a Plan
To achieve the financial goals that you have set you need a financial plan. The plan will have a number of steps which will lead to daily, weekly or monthly actions that will enable you to achieve your goals.
So let’s say that one of your goals is to get out of debt fast. This is a very good financial goal as it will free up extra money that you can use to meet some of your other financial goals. Your financial plan should always include the creation of a personal finance budget which we will discuss a little later.
Think about your priorities when you are creating your plan. What financial goals are the most important for you? If you want to buy a better home, or even your first home, and that is more important than anything else then make that your number one priority. Part of the plan for this could be that you need to increase your income for example.
A financial plan is key to good personal financial management. Always bear in mind that a plan can change and probably will as you will need to deal with some unexpected financial issues in your life.
Create a Budget and Stick to it
People that are in total control of their finances always have a budget. When you have a budget you can then determine what your spending plan will be to achieve your financial goals. So take a giant leap forward with your personal financial management by creating a budget.
If you live with a partner then create your budget together. Use a simple spreadsheet to record your income and all of your current expenditure. Include everything here such as the coffee you buy every morning on your way to the office. There is budgeting software out there that you can use and you can even get a budgeting app so you can keep up to date using your phone.
Once you have created your budget take a look at the things that you are spending money on that you don’t really need. For example you may have a gym membership subscription that you never use and do you really need those expensive coffees every day? Once you have formulated your budget and spending plan stick to it.
If you need Advice on Personal Financial Management then ask for it
If one of your financial goals is to retire early then get some advice from a financial planner on the best way to do this. They will be able to help you with investments and deciding on the best pension plan.
Most individuals do not require an accountant but if you know one then they could help you with the creation of your budget for a small fee. Some people become overwhelmed when they are creating a budget so if you feel like this ask a professional to help you.
Get started on your Personal Financial Management today
Don’t wait around to get your finances in order. Don’t waste any time getting control over your money. Get writing your financial goals right now and then create your financial plan and budget. Start your personal financial management immediately.