There has been an increase in the number of people getting into financial trouble for the past few years. These are mostly people from age 40 years and below. These people are especially from young working adults who have graduated and have been working for one to two years. Many of these admitted that they have very little understanding or knowledge of basic personal financial management. They all agreed that having an early financial education is necessary. They would be in a better position to manage their personal finances if they had some basic skills on how to manage their finances wisely, such as spending within their means and to be financially prepared for life’s uncertainties without encountering any negative impact on their lives in the future.
The benefits of early financial
planning.
You many think that financial
planning is troublesome and that you
have to give up doing things that you enjoy. If you have your own financial
plan in place, you will be able to budget your money in a way so as to avoid
excessive spending, getting into debts, and unnecessarily borrowing of money
from friends or banks. With good financial planning and control, you will be
free from financial worries and easier to achieve your personal goals in life. You can click here for more details and information on your finance and budget.
The importance of saving.
Life is full of uncertainties but with
proper planning, you will have some money saved for emergencies such as the
breakdown of your car, temporary injuries or sickness that can prevent you from
working, and etc. In time to come, this saving will also contribute to your
retirement fund.
Little by little, becomes a lot.
The importance of preparing a budget.
It is true that keeping to your
budget is not easy and you will need discipline to do so. But it will help you
to:
·
Spend and live
within your monthly income
· Grow your saving
· Prepare for unexpected financial emergencies
· Keeping you on the path to realizing your financial goal
·
Develop good
habits in your financial management.
Know the difference between your
needs and your wants.
A need is something that you cannot
do without such as food. A want is something which is not necessary and you can
do without. In our present time, a smart phone is a “need” for communicating
with people, online banking, and etc. Wanting the latest phone model with the
latest feature is not a “need” but a “want”. Do not buy on impulse. Always ask
yourself, “Is it something that you really need or something that you can do
without?” This will help you to spend wisely and to live within your means.
Impulse buying will create financial problems for you.
Be realistic in your investment.
The safest way is to keep your
money in saving or fixed deposit account. The interest is lower and the return
slower than other form of investments but it is not risky. You may be able to
grow your money faster through other forms of investments, but there is a
greater risk and chances that you might lose some of your money or all of it.
Do not put all your money into one type of investment. It is important and
smarter to spread your money across a variety of investments to minimise the
chances of financial losses. Be careful of get-rich-quick schemes that promise
high return in very short time. Always remember not to be greedy. Be careful to
check with trusted friends, family members whether such schemes are genuine or
not.
Questions to ask yourself before
taking a loan or using your credit card.
·
Is the product or
service necessary or important?
· If it is important, are you able to afford the monthly instalments
at this time or maybe you should wait a bit longer before committing?
· If it is necessary, do you have enough money to make a bigger down payment to short the term of instalment?
Do not be tempted to take a loan or
use your credit card just because you can have access to ready money upfront
without thinking about the repayment. Do not be tempted with the offer of
minimum payment of a small percentage stated on your credit card monthly
statement because doing so will result in a huge debt due to the compounding
effect.
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