You may have heard many financial planners in Glendale say that you should plan your finances to achieve your life goals in a systematic and planned manner in order to avoid surprises and shocks along the way.
It is a difficult task to teach young adults the value of financial planning. The only problem, though, is that they don’t know where or how to begin when it comes to planning their finances. To plan one’s finances well, one should follow these golden rules.
Money Management
The process of managing one’s money doesn’t have to be boring. There is no need to have a financial background to use this method. All you need is some commitment.
Saving money is the first step in managing money. Making a savings account can help you become more financially independent. You can borrow money from a friend to cover an emergency medical visit!
In the absence of friends, you might have to swipe your credit card. And you know the cost of credit cards is high. Do it one more time and you’ll find yourself in a debt trap before you know it.
There may be many financial goals on your mind. You may want a car, a new smartphone or to accumulate wealth. You will need money for all of these things. How will you get it? You have to save up!
Avoiding debt traps is easier if you save money. You should also save regularly. By doing so, you will reach your financial goals on time. However, what’s the best way to save? What’s more important, how much should you save? The moment you receive your salary, you should begin organizing it under various headings. Examples include EMIs, investment accounts, and savings.
Every month, save at least 10% of your income. That’s all there is to it! But don’t keep it in a piggy bank. Piggy banks do not grow money if left idle. Even saving bank accounts don’t yield higher returns.
This amount can be invested in a liquid fund instead. A liquid fund is a type of debt mutual fund that invests money in fixed-income instruments such as bonds, commercial papers, certificates of deposit, etc around 4%. See the magic of investing your savings every month over the long term! This golden rule has been backed by almost all financial planner Glendale.
Keep a Personal Balance Sheet
With a personal balance sheet, you can see what you own and owe. It’s an excellent tool for taking your finances to the next level. Your assets and liabilities are listed on this statement. The difference between your assets and liabilities shows your personal net worth.
Make sure you have your bank statements and other proof of the liabilities at hand before you get started. List your assets like your bank account, investments, the value of your home, and any other assets you possess. Your total asset value is the sum of all your assets.
Also, note down some of your liabilities, such as the balances on credit cards, home loans, and car loans. You can figure out how much money you owe by adding up all your liabilities.
If you have a negative net worth, that means you owe more money than you own. If you have a negative net worth, don’t despair. You will gradually increase your net worth as you keep repaying your loans.
In asset management, it is also important to consider what kind of assets you need to own. If you want to accumulate assets with high growth potential and low maintenance costs, you should always purchase those. Ultimately, it all comes down to how much you can actually use. Simply collecting things you don’t need leads to blocking your money in unproductive expenditures. To be able to get rid of unnecessary items, be aware of what you are actually using.
Manage Your Expenses Wisely
Ask any top financial advisors in Phoenix & Glendale, AZ and they will say that you’re probably living way beyond your means if you are living paycheck to paycheck and struggling to make ends meet even before the month is over. Perhaps you have unexpected expenses! These could leave you without funds to meet your basic needs. But there’s a solution.
Make a budget. You cannot control your cash flow without a budget. You can use a budget to show how much money you have coming in and how you will be spending it.
Analyze your expenses by categorizing them into fixed and variable expenses, urgent and non-urgent expenditures, necessities and luxury expenditures, and avoidable and unavoidable expenses. This will allow you to keep an accurate record of all your expenses. You will better understand things if you convert abstract concepts to physical ones.
Decide which needs need to be addressed first by creating a hierarchy. Prioritization is the key. Expenditures are limited, but wants are not. Resources must be managed. If you accept this fact as soon as possible, you will be able to better control your impulses to avoid unnecessary expenses.
You can allocate money to leisure and entertainment after covering all the necessary expenses. Make a grocery list before visiting the department store in order to avoid overspending. Set aside a weekend day where you will not spend any money.
Keep your budget on track. Stick to your boundaries and consider it a commitment rather than a burden.
Consult an Expert Financial Planner in Glendale
The last and most crucial golden rule is to choose the right financial planner in Glendale. With the right guidance, you can manage your expenses and secure your financial future.
