Benefits of personal financial planning | Personal Finance Views

Friday, January 25, 2013

Benefits of personal financial planning

Personal finance involves different aspects like – budgeting, saving, investing, insurance for making your financial life healthy. It’s very essential for you to learn about managing your finances in such a way that it will help you make your financial life secure.

Here are some benefits of personal finances which will click your mind to think about :

1) Evaluate your financial condition

First of all you need to evaluate your current financial condition by which you can get an idea of your financial goals. List the income and expenses and manage them on monthly basis.

financial planning

2) Make a budget

The main pillar of personal finance is budgeting. Make a So practical and reasonable budget, which includes your all your income sources as well as your expenses. While listing your income sources, your must include all the major sources like – salary, alimony, child support etc. On the other hand, While listing your expenses, you must include all your monthly bills and obligations. Then equate the income against the expenses to analyze the result and cut down some unnecessary expenses like – cable connection, subscription of expensive magazines, going outside of a movie , dining out etc. if necessary. Then contribute the saved money towards the daily expenses and debts.

3) Earn profit from investment plans

With the help of right financial planning, you will come to know the proper way to invest and get maximum profit. You can invest in stock, bonds, real estate, forex etc. but real estate is the most beneficial among them because real estate investment is a booming market.

4) Decrease the impact of emergencies

You’ll have to create an emergency account to help your loved one’s in their financial emergencies. If you will maintain an emergency account, you’ll not have to go outside to borrow money from others. However, handling your finances ensures that you can survive from these emergencies all by yourself.

5) Make a better future

Good financial planning safeguards your future against any unforeseen situations. As planning involves saving almost 10 % of what you earn every month, you save enough to meet any emergency. Thus, you do not have to go into debt incase a financial emergency arises. Financial planning also give you some importance to retirement planning. It will ensure that you have a better retired life and you do not have to worry much about your expenses. You are to contribute towards a retirement plan so that your after retirement years are safe and you are financially secured.

6) Maintain your debt

First, make a list of all the debts owed and payments you have to make and prioritize them while listing. Pay off the smallest balance on debt first and once it is paid, then move on to the higher level. This is called debt snowball method which is very popular among people.

I hope the above tips will help you to manage your finances and live a healthy financial life

No comments: