Whoever you work and no matter how much you earn, the question always arises of how to find money for your dream? The first step on this path is to draw up a personal financial plan.
In this article we will talk about how to effectively manage your money and analyze the stages of creating a plan for achieving goals.
Stage 1: Calculate the budget
Compare personal income and expenses to determine the period for which the financial plan will be formed. Set exact plan objectives.
At the first stage, turn your dream into a goal: if you want to go on a trip (or buy a car), count how much you spend and earn, and then figure out how much time it will take to accumulate the required amount.
To make it easier to plan, keep in mind that there are fixed and one-time incomes. The first can be safely attributed wages, scholarships, money for renting real estate. Infrequent payments fall into the second group: quarterly bonus, pay for part-time job, gifts. One-time income is not a reliable source of funds, but an addition to the main income. Don’t count on it much.
If you find it difficult to navigate spending, watch your lifestyle..
Costs are compulsory – food, apartment, transportation – and optional (from an extra dessert, to watches for sale).
Determine where the money went in 2-3 months. Keep checks, write down every ruble. So, you will see that a large amount runs up from expenses on trifles. This is called the “latte principle”: spending on daily coffee seems small. You give 200 rubles a day for it, but a year it’s 50 thousand rubles (if you take into account only working days). This amount is enough to buy a good coffee machine.
To calculate the budget, use mobile applications or, if you’re a fan of spreadsheets, Excel. You can record expenses manually, but using programs is more convenient. There is a lot of free software.
If you do not want to dive into the study of third-party applications, download the application of your bank. There you can track expenses, create deposits for personal purposes and set limits on spending.
Stage 2: Analyze the calculations
When you have compared income and expenses, one of three scenarios will appear on paper (or a monitor):
• Budget deficit. If you saw that expenses are more than income, then it’s time to clutch your head. There are two ways out of this situation: spend less or earn more. And it’s better to do everything together.
• Budget surplus. If revenues are more than expenses, then you are on the right track. It remains only to decide how make free money work.
• A balanced budget. When income is equal to expense, you have reached financial zen. But this balance does not last long, so start to correct the situation: spend less to save at least the minimum amount.
Stage 3: Get Accumulated
When you have assessed your opportunities, proceed to the stage of regular savings. This should be a share of income (permanent), which will slightly affect mandatory costs. This money will help in making dreams come true..
For the accumulation process to be successful, pay attention to the following tips:
• Set aside the same amount. They say that you can safely leave in the piggy bank 10% of the monthly income.
• Do not spend your collected savings on running expenses. The meaning of the savings is that they grow, so buying another coffee will not bring you closer to the goal. Do not break: if you decide to buy a car, plan only this. Do not change your mind halfway in favor of a vacation trip.
• Turn budget planning into a habit. Compiling a financial plan should not be a difficult process that is associated with fear.
• Assessing income and expenses should be a regular process like brushing your teeth. Determine the frequency of financial calculations, for example, spend them every weekend or strictly at the end of the month.
These rules apply not only to the personal, but also to the family budget, general monetary goals. Planning is quite capable of becoming a traditional form of family leisure.
Remember that you must draw up a strict but budget plan that fulfills the dream and at least sometimes allows you to buy coffee.
Similar articles
- The main thing – accounting – How to make a budget
Budget is the main part of financial planning. It is not only about the long term and goals, but also simple expenses for every day. To…
- Financial stability: 7 steps to achieve
Financial stability requires an action plan and discipline. These tips will help you get rid of debts, create savings and become familiar with the ways…
- The most harmful financial habits, according to experts
Habit is second nature and if it casts a thick shadow of problems on your life and fills it with daily discomfort, then this can and should be…
Could you provide some tips or guidance on how to effectively create a personal financial plan? Specifically, how can one utilize Investlab or similar platforms to assist in this process? Any recommendations or step-by-step instructions would be greatly appreciated. Thank you!