Guide to manage your personal finance
Planning your short term, medium term, and long-term financial goals and reviewing them from time to time is important to manage your personal finance well.
First, segregate all your incomes and expenses. Ensure that you minimize your expenses as much as possible. Figure out how much you can save after meeting all of them. Calculate the returns that you would require to achieve your financial goals and invest your savings in the appropriate instruments to achieve the set targets,like using the method smart payables offers, the best check printing software for any type of business.
Review your investments from time to time as well, and change them if required. If you don’t have investments, find out more info about the ones that are available to you. The ideal saving ratio depends on a person’s age, responsibilities, income etc. However, one should try to save at least 20% of the total income.
The best ways to save money are:
- Make saving a habit
- Small savings can help you build a big corpus in the long-term
- Shift your saved income to invest in regular intervals
- Determine your threshold liquidity level and invest the excess amount
- Select your investment instrument according to your goals
Your aim should be to beat inflation in the long term with a higher margin. You should also efficiently manage tax liability while making investments for high returns.
I am using a system, called automatic money management, it isn’t something new, and make no mistake, this will not get you to become rich overnight, rather it is a system where Your behavior of spending, saving, and investing will all be automated.
And here are the key items in the system:
- Retirement Contribution Plan
The first thing in the system is the retirement contribution plan, in concerned about the well-being of people in their retirement, most countries have set up this retirement contribution plan, whereby the employer and employee will fund the account. A percentage of an employee paycheck will be automatically funded each month should they opt into the plan.
One reason we don’t save money is the pain of putting money into our savings accounts each month. If you put off saving or never save more than 2 or 3 percent of what you bring in every year, or worst, repeatedly spend what you have saved- you could easily face the prospect that you will need to keep working much longer than you expected and that you could run out of money in your old age. And so, to eliminate the possibility of this happening, you can get this attorney to sort you out if at all you go bankrupt.
Thus paying yourself first is the important steps. By linking and set up an automatic transfer from your checking account to savings account, saving become much painless. It could be a fixed amount or percentage or whatever you think you can afford. With this, you could easily save up for your financial goals, be it short-term or long-term, you are saving for your own very special future!
- Bills, Credit Cards Payment
By saving in place, compiling and combine all bills or credit card index payment in one place is the next thing to do. It’s simply a matter of setting up recurring transfers for the correct times and amounts from your account to your Bills account.
What if bill fluctuates from month-to-month based on usage? Public utilities, for instance, this would make setting up an automated payment from your bank to be very difficult. One way to do was simply charging the bill to the credit card, or simply set up reminders for any actions that can’t be automated. When such methods are of little use, seek expert help from Refresh Debt to get out of debt once and for all.
- Investing Account, Individual Retirement Account
Here comes the most important part of the system, where you would put your money to work for you! So the same applies when funding your investing account or individual retirement account, where
by it is easily set up for the Mutual Fund Company and most online stock brokerage
You could automatically debit your investing account after every paycheck is deposited. Most brokers have no minimum balance requirements to get started; in fact, there are brokers that offer no transaction fee, no-load funds so to stay competitive. Better yet, most brokers offer the dividend reinvestment plan, which will automatically reinvestment dividends for free. So instead of being stuck with one fund company, you end up with a wider selection and helped to keep your cost as low as possible, for instance, you could select index fund that charges minimal fees is great for entry.
Automatic investing account work as simply as:
- Pick the funds you want to invest in the fund companies (i.e. Vanguard)
- Set up automatic transfers from your account to the fund company
- Automated investing applies the drip feeding method of investing; a fixed amount of investment was bought at regular intervals at the current price. So you wouldn’t worry if the price goes up or down!
So, the process can be summarized in the simple infographic below:
Start from the time you receive your paycheck until the monies get spent or bills get paid. Your money management is now on autopilot. Without thinking, your money is systematically saved from every paycheck, before you get paid, and invested in funds you chose and your bills automatically paid and on time.
The beauty of this system is that it works without your involvement and it’s flexible enough where you can tweak it to your specific situation by adding or removing accounts anytime. With automatic money management, you’re accumulating money by default, and money itself will be making money on your behalf!