The year 2013 is bidding “Good-Bye” to all of us. I hope and surely believe that the year would have been remarkable for you especially in terms of personal financial planning. The year would have given you enough opportunities for earnings, and probably you would have been successful in attaining your saving goals too.
It’s always encouraging to find out that you are meeting the targets that you had set with respect to your personal financial planning. However, you need to continue the good work that you had done in 2013 in the year 2014 also.
Yes, the year 2014 awaits with great hopes, opportunities and possibilities.
You need to learn from your mistakes, continue the good work that you had done in the past and probably find new ways to improve your personal financial position.
So, what this essentially means for you?
Well, you basically have to devise Personal Financial Planning for 2014.
If you begin the year 2014 on a positive note, you are bound to attain your goals with respect to your Personal Financial Planning.
That will only happen when you will follow the right tips and methods for controlling your expenses, making your efforts to save more and making the right moves for investing your money.
Here under, I have illustrated some useful tips and methods that can help you to improve your personal financial life in 2014.
So, have a look at the tips for Personal Financial Planning for 2014.
If you go on to follow the tips and methods for doing Personal Financial Planning for 2014, you can easily enhance your personal financial life for a better, stable and secured future.
Personal Financial Planning In 2014
Examine Your Expenses
Personal Financial Planning is never complete without managing your expenses. So, in the year 2014 you need not ignore this segment. In fact, you have to come up with a comprehensive analysis of your expenses for the year 2014. Once you successfully examine your expenses, you then come to know how exactly you are spending your money and what scope you have for further controlling your expenses.
For this, you need to examine each category of your expenses. If you have been preparing your monthly expenses list in the past, then it can ease your task else you need to start from scratch.
First, you need to sort out the categories for expenses and then list down how much money you are spending in each of these categories. You invariably end up having a long list of expenses. There are certain fixed expenses such as mortgages or rent, loan repayment installments, insurance premiums, and many others, as well. Then there are variable expenses such as credit card bills, utilities, and expense on groceries, cable, internet service and many other household expenses. You also have discretionary expenses such as entertainment, dining out, etc.
Well, you cannot do much about your fixed expenses other than ensuring that you pay them timely and regularly so that you do not incur any extra charges and end up paying them quickly. However, you can control your variable expenses as well as discretionary expenses, as well. This is the area which you need to look at carefully so that you can find ways for reducing these expenses. There are many areas where you can reduce your expenses. Reduced expenses mean more room for savings and investment. For example, you can set goals for reducing your electricity bill, gasoline expenses or even your grocery expenditure.
So, examining your expenses can result to be an indispensable step for your Personal Financial Planning for 2014.
Preparing a Realistic Budget
Preparing a realistic budget is an important task for your personal financial planning for 2014. Moreover, budgeting comes as a challenge as it involves a comprehensive research and analysis before you can come out with a realistic budget. In this context, it makes appropriate to state that budget preparation cannot be done in isolation. You have to take into account your financial goals including your saving goals, lifestyle goals, retirement goals, as well as your responsibility towards your family.
Moreover, it requires a lot of commitment and willpower to stand and stick by your budget. It is simply not enough to write down your budgetary plan. You have to show the willingness to adhere to the outline that you have listed in your budgetary planning if you want your personal financial planning to be successful.
Well basically budget preparation involves listing down your current monthly expenses and well as your present monthly expenses. However, budget preparation does not end here. It is actually much more than this. As already pointed out, your budget preparation should take care of your financial goals. There is no point in preparing a budget if you are not able to meet your saving goals.
So, for example, when you decide and list down that your monthly grocery expenditure needs to go down by $100, you actually do this because you want to allocate $50 towards your retirement fund and the rest for your children’s future education.
With this sort of ideology, intention and vision, you need to prepare your budget for 2014.
This will ensure that you have your financial life under control. It will help you to check your spending habit and provide you opportunities to channelize your money for better returns. With a realistic budget for 2014, you go onto prepare the road for a happy and prosperous future.
Have a Viable Debt Reduction Plan
Living a debt free life is one of the most essential prerequisites of a stable and secured financial life. If you want to consolidate your personal financial situation, you have to ensure that you control, reduce and free yourself from all kinds of debts. So debt reduction becomes a corner stone for anyone who wishes to do personal financial planning for 2014. Basically, you need to follow the strategy of attacking your debt and taking adequate measures to avoid further debt.
So with the perspective of debt reduction in the year 2014, you first need to figure out all your debts. You should list down all your debts including their balances and rate of interests. When you do this, you come to know what balances you need to pay off, and what strategy of debt payment would be most suitable for you. Preferably attack the debt which charges the highest rate of interest. The benefit with this approach is that you end up saving the most money that you would have paid in the form of interest. Have a definite action plan and set a clear deadline for clearing of the debt.
Other than the above approach, there is another way to tackle your debt. This is known as the “debt snowball” approach. Here, you first go onto clear the debt with the lowest balance, then clear the debt with the next lowest and likewise move forward to attack all your debts.
Besides this, you need to ensure that you do not go onto take any further debt. Wisely using your credit cards, avoiding unnecessary expenses greatly help in your debt management efforts. Likewise building cash reserve for meeting unexpected expenses comes very handy in difficult times. Then you need not borrow or take a fresh loan just to counter such situations.
So you see that debt reduction (payment) holds an important place in your overall personal financial planning for 2014.
Building an Emergency Fund
Most of us are so involved in meeting our regular expenses that we just go onto neglect one of the important element of personal financial planning that is building an Emergency Fund. Actually you need to build an Emergency Fund so that you can successfully meet any unexpected expenses that life may thrust upon you. In fact, you have no control over emergency situations, and they can happen unexpectedly without even warning you. You may fall seriously ill; meet an accident and so on.
Well, you need to build to an Emergency Fund so that when such a situation arises you face no financial problem in meeting them. So your Personal Financial Planning for 2014 should give due focus on building an Emergency Fund. Essentially, Emergency Fund should hold money equaling eight to ten times your monthly salary or earnings. Thus make a provision in your budget for Emergency Fund and allocate savings to it. If you have a budgetary constraint, you can begin with a small amount of money for your Emergency Fund. The safest and surest way of building an Emergency Fund is to have a separate savings bank account for it. This way you can fund is protected and can be easily liquefied in times of need.
Saving, Insuring and Investing
Personal financial planning for 2014 would not be complete without a due mention of saving, insuring and investing. So, if you want to build a secure and prosperous future for yourself and your family you essentially have to save, insure and invest in 2014. Basically, you need to set specific saving goals for yourself. This motivates you to keep on saving.
Your savings goals can be short term or can even be for long term. Suppose, for example, you want to buy an iPhone for yourself. Then you can set a saving target for it and continue to save monthly till you accumulate the amount you need. Likewise, you can save for a vacation, and even for your retirement.
Apart from saving money, you should take adequate steps for getting insured. You can provide adequate financial security to your family by having adequate insurance cover.
Finally, in the year 2014 you should look for making investments. If you want to build wealth for yourself and family, you should incorporate investment in your overall personal financial planning strategy. There are varied options for you as far as an investment is concerned.
However, you should make sure that your investment portfolio should be diversified so that the risks are minimized. Another important point, you should invest with a long term perspective. Some of the options that you can consider for investment include stocks, investment in gold, ETFs, and as well as Mutual Funds. However, you should take into account your risk bearing capacity before making a final decision on choosing an investment option.
So you can well be on track for a fabulous, stable, and prosperous future if you adopt and implement the personal financial planning methods as listed above. Personal financial planning is essential for a golden future, and it is in your own benefit if you begin to incorporate in your life from the coming year 2014.