Content

• Steps
• Advice

A financial planning can help you settle your outstanding debt, secure your financial future, and even make you happier and more relaxed. Depending on the circumstances, the right financial plan may not require you to spend less money. Instead, you just need to make more effective financial decisions.

Steps

Part 1 of 3: Tracking income and expenditure

1. 

   Gather all the data you need to start tracking your spending history. Gather old bills, bank statements, and receipts so you can calculate the exact amount spent each month.

2. 

   
   
   Consider using software to calculate personal finances. Personal financial calculation software is quickly becoming a new trend. These programs feature financial planning tools that can be customized to your conditions, and an analysis to help you plan your future cash flows and better understand your spending habits. . Some personal finance software includes:
   • Mint
   • Quicken
   • Microsoft Money
   • AceMoney
   • BudgetPulse

3. 

   
   
   Create a spreadsheet in the computer. If you don't want to use the software for financial planning, you can make a simple spreadsheet yourself. Your goal is to chart all your expenses and income for a year. So create a spreadsheet that clearly shows all the information that can quickly help you identify any areas where you can spend your money wisely.
   • Label the top horizontal cells (starting with B1) with 12 months of the year.
   • Create a column of expenses and incomes in column A. You can list either income or expenses first, but try to include expenses and incomes separately to avoid confusion.
   • You may need to include expenses under category headings. For example, you can create a category "living expenses", which includes electricity, gas, water, and telephone.
   • Decide whether to include items with direct deductions from your check such as premiums, retirement savings or taxes. If you do not include these items in your spreadsheet, be sure to list your net income (after deductions) instead of listing gross income (gross income before deductions) in the “income” section.

4. 

   
   
   Record budget data for the past 12 months. Record all your expenses and income for the past 12 months, using data from banks and credit statements to accurately represent all sources of income and expenses.

5. 

   Historical determination of total monthly income. Are you on a fixed monthly salary and are sure how much money you make per week? Or are you a self-employed and the salary varies from month to month? Keeping a history of your earnings for one year can help you accurately identify average monthly income.
   • If you are an independent contractor or self-employed, remember that the money you bring home is not the same as what you will earn. For example, you could bring home $ 2,500 each month, but that's your pre-tax income. You need to calculate how much tax is payable and deduct it from your monthly income for a more accurate figure.
   • If you're a salaried employee, don't include your tax refund in your gross income. Your monthly income should be the money you take home with you after taxes. If you really get a tax refund, treat it like "godfather"; If not, you don't have to worry about it either.

6. 

   List all your monthly expenses on the spreadsheet. What bills do you have to pay each month? How much money do you spend on food and gas per week? Do you go out to dinner with friends every Friday night or watch a movie once a week? How much money do you spend on shopping? Keeping track of your real expenses over a year will help you realize your exact spending habits, as most people underestimate how much they spend each month.

7. 

   Analyze your income and expenses. If your expenses are greater than your income, you are living over your income. Your spending plan should be divided into two parts:
   • Fixed costs. These include recurring monthly expenses such as bills of living, insurance, loan payments, food and essential purchases such as clothing and appliances.
   • Money to spend as you like. Discretionary expenses are variable expenses that you can "choose from". Items in this category include savings deposits, money for entertainment activities, money for vacation and other luxury expenses.
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Part 2 of 3: Financial planning

1. 

   Preliminary planning. The data in part 1 will help you to make an accurate preliminary financial plan. You should calculate your fixed expenses and income, and then decide how much you want to spend.
   • To calculate fixed expenses, you take the average monthly number over the past year, then add 5%. For example, the electricity bill you pay varies from season to season, but if the average is $ 210 per month, you should count this as $ 220.
   • Be sure to include changes in fixed costs such as student loans that you must pay or add on a mortgage to buy a new car.

2. 

   Set a goal for how much you want to spend. Once you've determined your monthly surplus, you can decide how to spend it. Your goals must be clear, definitive, and achievable. Some short-term goals could be:
   • Save $ 8,000 for a surprise fund
   • Take 5% of each check deposited into a savings account
   • Pay off credit card debt in 12 months
   • Save $ 6,000 for an anniversary vacation

3. 

   Make the most of the tax incentives. There are possible ways to save money for tax benefits. If you put money directly into your 401 (K) or personal super, that amount can be deducted before tax is applied.Some companies even help employees in the form of matching (meaning the company will add to your 401 (K) with the money you put in), which can help with your savings. even more.

4. 

   Calculate the rest of the discretionary expense. This section is entirely based on a perception of value. What values ​​do you have and how do you want to spend your money demonstrating them? After all, money is only a means to an end, not an end.
   • What kind of person are you, what do you want to do? Many people spend money on hobbies, for hobbies or for charity. Think of it as an investment in an experience or a sense of satisfaction.
   • Think about what makes you truly happy. It has been argued that people who spend money on real experiences are happier than people who spend money on property purchases.
   • Consider saving extra money for travel or vacations.
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Part 3 of 3: Become a good financial planner

1. 

   Stick to your financial plan and don't overspend. This is the first and most exclusive rule of budgeting. This is pretty obvious, but it's easy to over-spend money, even with a plan in place. Pay attention to your spending habits and how much you pay.

2. 

   Try to cut back. Reducing big expenses can be the most frustrating but also the most effective way to spend in the plan. If you're on vacation every year, consider staying at home this year. Cutting back on smaller expenses can also add up.
   • Try to recognize and cut back on luxuries you normally enjoy. If you enjoy a massage every week or enjoy expensive wine, cut back so that you spend money on those luxuries every month or two.
   • Save money on smaller expenses by switching to conventional brands and eating at home more often. Try not to eat out more than once or twice a week.
   • Think about whether you can reduce any fixed costs, like switching to cheaper phone service, changing TV plans or improving energy efficiency in your home.

3. 

   Treat yourself periodically, but be reasonable. Money should serve you, not vice versa. You don't want to be a slave to your budget or money in general, so it's important to indulge yourself every month without breaking your financial plan.
   • Don't overdo the reward system to the point of having adverse effects and ultimately affecting your budget. Treat yourself to smaller, less expensive items like a coffee latte or a new shirt and avoid flaunting expensive items like a vacation or a pair of luxury shoes.

4. 

   Pay off credit card debt every month. If you want to use a credit card, you should try to keep your balance at zero every month to avoid high fees. If you can't pay off your current balance, give priority to prepay it within a reasonable amount of time so that you reach a zero balance.
   • Try switching to cashing for most weekly purchases - especially "extra" items like eating at a restaurant or drinking coffee. This can help you manage your spending, as people are more concerned about how much money they spend with cash than when swiping cards.

5. 

   Reduce your taxes. Take better advantage of the detailed deduction when filing your taxes each year.
   • Start with your receipts, especially if you are a freelancer, work from home or work remotely. There are many amenities expenses that can be paid for as part of contract work when paying taxes.
   • It's a good idea to explore ways to get a better tax refund if you're a contractor, or ask your accountant how to get a greater tax refund.

6. 

   Petition for home pricing. If you own your home and have sufficient proof, you could potentially get a property tax reduction by appealing about the value that the valuator charges on your property.

7. 

   Do not rely on "godly" money. Don't take into account potential (uncertain) sources of income such as year-end bonuses, inheritance or tax refund. Only certain amounts should be included in the budget. advertisement

Advice

• Put the change / coin in a jar and then take it to the bank to redeem. You will be amazed how large your pennies can be.
• Avoid high-interest credit cards and payroll loans, as these loans have high interest rates and will end up costing you a lot of money, especially if you struggle to pay your monthly bills. on time.