Tuesday, June 24, 2008

Some Tips for Financial Planning

There are a lot of people who live from pay check to pay check and the idea of having a little extra cash each pay day seems very impossible to achieve.

Financial planning is a great way to manage your funds and expenses so that saving a few dollars every pay day can be done. However, to do this you need to have patience and determination. A lot of us always hear the importance to budget our finances and it sounds like a wonderful idea but to actually do it is the hard part. Financial planning is a good way to save some money by listing out all of your expenses and then sticking on to your budget. If you are successful in your financial planning you will be able to start saving money.

It is also proven that financial planning tends to fail when either of the following two things occurs:

1. Something that you planned on spending on is far more expensive than you thought it would be.
2. When something unexpected happens like your roof breaks down.

There are a few very useful things that you can try to save some money. For paying your electricity, telephone and water bills where you usually have an idea of the amount that you will be paying, you can arrange pre-payments rather than waiting for the bill to come. Even if you will be paying just a few dollars every week, it can make a huge difference if your bills arrive every quarter.

For credit cards, they can be the best thing and can also be the biggest ruin in an individual’s financial wellness. If you frequently use it, always remember that it is best to pay the outstanding balance in full to save more dollars in interest. If you are unable to at least pay more than the minimum balance. It is also better to talk to your bank or other lending companies if it is possible to consolidate your credit cards into loans. Interests on home and personal loans are a lot lower than the interests on credit cards.

The bottom line in financial planning is to know when to say “no”. Regardless of how good the deal may be, do not buy it if you know that it will strain your finances. Try to save that money instead. By the time that you are able to have enough money to spend, you will realize that the things that you were supposed to buy were not a necessity.

It is important that you learn to have patience and determination in financial planning. You may not be able to pay all of your debts overnight but you are at least getting closer to your goals day by day.