How to look after your personal finances?

1 October, 2014

Managing your personal finances should be your foremost priority today as the markets are heading northwards, everyday. Despite the rise in the stock markets all over the world, the world is still not out of the woods.  Job creation and growth are worrying governments, all over the world. It is never too late to plan your finances, for a better tomorrow.

Some financing tips:

  1. Setting up targets: Our experts suggest that you should set up reasonable goals for the future rather than saving money blindly. Besides, goals should also be set for debts as one should be determined to pay back a target debt, in a particular month or year.
  2. Using right kinds of debts: You should be aware of all your debts and should categorise them into three types including the good debts, the acceptable debts and the bad debts. We should rule out the ones with highest interest rates known as the bad debts first and stick to the first two categories. We should always go with a low-interest rate plan, when it comes to debts.
  3. Learn to pay yourself first: paying yourself doesn’t mean to buy more for yourself! It means keeping some money aside into your saving deposit, before you make your necessary expenditures. This measure keeps you on the right track, since the very beginning.
  4. Learn to live within your limits: it is necessary to know your limits before you go extravagant spending blindly, letting yourself pile up bills, which you may not be able to cover up in the future. You should set up your limits and prioritize what is needed essentially and what can be avoided. If you keep on defaulting on payments, your good debts may sooner or later turn into bad debts. Thus, one should only go for the affordable commodities, one at a time.
  5. Prepare for the worst: it is always recommended to keep some money saved for a crisis or emergency situations by saving at least thrice of your monthly expenditure. You can also think of investing in retirement plans, at the earliest.

Using IRAs

You may even set up million dollar retirement plans by investing as much as you can, in them, at a young age, which is quite helpful, if your debt rates appreciate significantly. There are special IRAs like the Roth IRA, which are known to help in financial planning. It is better to plan your finances as soon as you begin to earn. It will allow you to reach your goals earlier and save more by the time you retire.

One may also be updated about the financial planning through various blogs or books available easily on the internet.

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