Steps to Financial Planning:
Get to grips with your own budget
- Monthly basis – establish your monthly budget and stick to it.
- Expand it to an annual basis.
Saving:
- Don’t wait until it’s too late to start saving – This is one of the most important life lessons.
- Aim to save 10 – 20% of your disposable income, depending upon your age. The later you leave it, the more you need to save.
- The sooner you start saving, the more compound interest you will earn.
- Be careful of relying on your pension alone for retirement – it may not be enough.
- Get money in your own name. You cannot expect your spouse to save for you.
- Need to be held accountable. Make sure that there is someone who checks that you are saving.
- Use a debit order to force yourself to save.
When Buying:
- Pause before you buy.
- Do you need it?
- Can you afford it?
- Be careful of emotional buying
- Remember, a sale is not worth it if you can’t afford it.
- Don’t buy on credit – you are spending future money that you don’t have. This is especially true for luxury items.
- Make use of a debit card, it will not allow you to spend more than you have.
Evaluate your debt situation
- If payments are beyond your means, discuss the issue with your creditors. They would rather take longer than have to lose out and declare you bankrupt.
- Try to reduce your debt situation as much as possible.
- It is not necessary to have the best house or car.
- Live within your means