Financial planning is one of the most effective ways to keep your accounts up to date and prepare for the future. It is only by controlling both income and expenditure that unnecessary expenditures can be identified and goals set for the realization of a more expensive dream – such as the acquisition of a real estate or the realization of it. that of a longer trip, for example.
When you arrange finances, you find out what your real standard of living is and why the bills never hit. So start now putting all your spending, fixed and variable, on paper or on a digital spreadsheet to properly analyze your financial life and get organized.
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What should be included in the spreadsheet
When it comes to effectively setting up your financial spreadsheet, start with the fixed expenses – which include those accounts whose amounts hardly change monthly, such as the car, house, rent, and apartment condo, and then enter the variable costs that include grocery shopping and water and electricity bills, for example. And these are the last ones that can be changed if expenses are to be cut.
Once you have entered the amount you enter and all the monthly expenses in your spreadsheet, it is time to review the finances and start planning.
Planning must be realistic.
Outlining extremely realistic financial planning is of paramount importance for it to work effectively. There is no point in wanting to keep all the bills you already have, and save money if the amount of monthly revenue does not cover even the usual expenses.
If your earnings do not allow you to go to the gym 3 times a week, go to the hairdresser biweekly, or go out to drink with friends on Fridays, Saturdays and Sundays, then try to forget about those habits. Otherwise, you will be living a reality that, unfortunately, is not yours. Of course you will not fail to do everything you like, but it is important to set priorities, to know what is really needed or not.
Goals must be within range
Just as it is important to live in reality, cutting spending that is incompatible with what you get, so it is not necessary to get rid of everything by living in suffocation. No more saving more money than you could just travel in a year.
Another very important tip: do not count on what is not yet certain, such as forecasting a salary increase or extra work, for example when it comes to setting your goals. This kind of reckless attitude can get you in the way of all your financial planning.
Follow-up should be done monthly.
After analyzing spending, make sure you are living up to the real possibilities and setting possible goals, time to keep a close eye on financial planning. Tracking the spreadsheet monthly will help you understand if you are staying in line or not.
This follow-up will also be important to reassess whether everything is as you might have imagined or if you need to make adjustments by cutting back on spending or saving a little more money. Unforeseen events happen, so sometimes you have to rethink what was previously planned.
Impulses should be avoided.
Buying something that is out of budget needlessly can take your financial planning to the pit. This is because this money will have to go from somewhere it was already intended for. Even if you have earned an extra, it is good to wonder if it is really worth surrendering to the impulses or whatever it is better to pay off an old bill or depositing the extra in savings.
Debts must be settled first of all
If you have any doubt, regardless of the amount and reason you purchased it, it is good that your intent payment is within your financial planning. After all, the sooner they are settled, the less interest you will pay. Therefore, it is not used to save a percentage of the salary on the savings if the debt is still standing.
Before saving, you must therefore have your accounts reset. In general, the interest on loans is always higher than the yield on savings. It is necessary to remember that, nowadays, it is also much easier to renegotiate the debts. You can get a good discount and get rid of them sooner than you think. Think about it!
All of these tips will help you keep your financial planning going. So follow the suggestions carefully and live a quieter life, keeping the bills and plans ever closer to being realized.
So how is your financial planning? Are you keeping your spreadsheet up to date? Comment here and share with us your experiences!