With the current sluggish in economy, it is really important that all individual and household plan their personal finance well since this can act like in insurance for the time you urgently need money and of course, help you stay financially healthy. Masii see the importance of this knowledge and would like to guide you through some basic tips for your personal financial planning that some might overlooked.
1. Save first, use later
Income – Savings = Available Cash
This might sound simple but it requires huge discipline to follow. Most of the people would spend everything they want first and deposits the residual amount as savings. In this case, the amount of saving deposits will be varied depending on the amount you spent. However, working backward might sound more rational to follow. Simply separate the savings amount right after the moment you received your monthly income and the rest is what you can spend. With this method, you will have a stable amount of savings that you can deposit higher return investment like fixed deposits.
2. Create your own records of income and expenses
Well, don’t freak out yet! Even you are not accountant but it is not that complicated to do. By recording your daily income and expenses, it would be so much easier for you to track what source of income you received and what you are paying for. With this, you can examine the loophole of your spending and help you tighten your budget in a meaningful way by cutting out or reduce the amount of those unnecessary expenses as well as helping you see and get the best out of your regular/seasonal sources of income.
3. Be aware of your debt
Small amount of debt might not look dreadful. However, when the time passed, the magnitude of interest will significantly increase which might even exceed the principal amount and of course, that’s a nightmare. Hence, you must stay alert of all the debt you owned and try to repay it one by one. Otherwise, the bad credit records will follow you like a shadow which will eventually prohibit you from getting more loan in the future.
It is not that hard for the beginner to start doing their personal financial plan in this volatile economy but the most important things to keep in mind is that the sustainable financial health requires more discipline than the amount of income so it’s better to start planning now!