To fulfill all our desires, we not only have to save a part of our income, but also invest it.
We safe our future financially by increasing our saving money by invest it, and this is how the role of "personal finance" begins.
Personal finance means managing our finance according to our future goals.
Step 1.: Write your financial goal
Going for a vacation, retirement, buy a new car, saving for your child education all these are the financial goal.
Achievement of these financial goals, depends how well you plan your investments. The financial goal can be long term or short term.
For example, saving for retirement is a long-term financial goal, while buying a house or going on vacation is a short-term financial goal.
You need to make a separate list of all long-term and short-term financial goals and then plan your investment to manage your personal finance.
Step 2.: Create a financial plan for managing your personal finance
If you already have a financial goal, then proceed with preparing and managing your personal finance in an organized manner.
Without a financial plan, no person can meet his financial goals nor manage his finances.Not making a financial plan is a constant mistake in financial planning. A financial plan must have several stages to achieve the financial goals.
So, first step of creating a financial plan is making personal financial checklist.
Step 3.: Create budget and stick to it
When you make a budget, you prioritize your expenses which ultimately helps you to control unnecessary expenses that you incur.
Budget automatically helps you reduce expenses and increase saving. By using these savings, you can repay your debts and manage your personal finance.
You can follow the 50/30/20 rules to make your budget. To know more about 50/30/20 rules,
click here --> The 50/30/20 rule - Powerful way to managing personal finances
Step 4.: Reduce your debt
Reducing your debt can help you take a major step towards achieving your financial goals. So try to avoid buying unnecessary things which will not only help you in reducing your debt but will also help you in saving and managing your personal finance.
You can follow basic principles of effective money management. To know more about ,
click here --> Basic principles of effective money management
Step 5.: Invest your Savings as per plan
The principles above help you to accumulate funds that you can invest. Every panny which invested is like a worker who works tireless for you. Invest your savings and also the returns from those savings, to build an Army of workers earning money for you.
Money kept in savings account does not offer as much as inflation beating returns offer. It is a good habit to save your money rather than spend it, the super-rich know that the real road to wealth begins with investment.
So, Start investing as per your long and short term goals but one thing kept in mind: when you choose your investment tool for your long and short term goals, must sync with your plan and and stick with your rules. Frequently changes in investment plan, will not help you to achive your financial goals.
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