Personal finance is the financial planning that an individual or a family unit uses to budget, save, and spend money over time while considering various financial risks and future life events.
For one to have a successful financial plan, the consideration of setting financial goals is very important as it gives you a base on what to focus on.
Here are some other reasons why personal finance is very personal;
1. Putting into consideration that personal finance is a balance between consumption, saving and investments. In planning a financial budget, one should reduce the amount of money consumed and put it into savings and investments. Remember, the more money you consume today, the less you will have tomorrow.
2. Getting knowledge on finance, be it through reading books or even listening to podcasts, is important as it will help you make sound decisions and ask yourself the right questions as you continue on your journey to financial freedom. The simplicity in the rule of money is seen in the fact that togetherness is essential that if you help me today, I will help you tomorrow.
3. Three things are needed for the management of your personal finance to be successful. These include having, the correct mindset, the right toolset and lastly, obtaining the right skillset will help you make good decisions and set the right financial goals that are achievable within a set period of time.
The toolset refers to everything you’ll need to keep track of your personal money, including budgeting software and financial services products like standing orders that automate saves.
A skillset is one’s awareness of the financial products, investments, and options that are available for their disposal.
4. Sustaining good and healthy habits will help in making it easy for one to reach their financial goals. Note that sustainable wealth creation follows a rhythm. Creating a pattern when it comes to financial planning will help you move closer to your financial goals.
5. Make a review of your income, spending habits as well as any debts that you may have. Also, look at your long-term and short-term goals and adjust them accordingly.
6. Having a monthly budget that is physically written down will more likely help you stick to it, rather than just having a mental one. An accurate monthly budget will help you reach your financial goals, be it saving for a car, a house, or even saving up to have enough capital to start a business. Some of the budgeting apps you can use include, isave, fudget, and YNAB.
7. It is recommended for one to save at least 10 percent of their total income. A monthly budget will help you achieve this, as it will help you track all your expenses on a day-to-day basis. Other great platforms that will help you save money while earning interest include CIC and Britam money market fund.
8. Creating a connection between financial market products and investments is important as it will help you create a priority list for the future.
9. Having good credit will assist you in getting investors for your business as well as help find people who are actively ready to invest in your business.
In conclusion, creating a good financial budget and making financial goals will help you move closer to financial freedom. Putting it down on paper will also increase your chances of following the set budget.
