You need not be perfect or lucky to be rich. It just requires focus and obviously knowledge of how to save and invest the existing assets. It’s never too late to be thoughtful. The results of this planning ensure the enhancement of the quality of present living including the reduction of uncertainty to one’s future needs.
The uncertainty with today’s scenario of the economy is that is has become pertinent to make wise financial decisions. To have long-term financial well-being, Personal Financial Management is a must which involves proper financial planning with adequate information.
The definition of becoming rich may vary from person to person. For some, it may mean expensive possessions while for others it may be not to worry about finance. Whatever the definition might be, it can only be achieved through a frugal living (not extreme) and prudent investment.
What is Personal Financial Management?
It is a process of managing the assets for personal economic satisfaction by preparing a plan by identifying and setting priorities. It helps you achieve full control over your financial condition which varies according to an individual or a household. This process goes for every individual or a group willing to nurture the quality of living just by attempting a few changes in daily life. It involves behaviour towards saving, spending and investing.
Advantages of Personal Financial Management
- A sense of total relaxation from the problem of financial needs.
- Avoiding extra debts and dependency on others for financial security.
- Enjoying expensive possessions with your existing assets’ investment without the insecurity of losing resources.
- Protection of resources of finance.
- Possession of money or assets in case of an emergency.
- You won’t have to force yourself to do a thing.
Tips to manage your Personal Finance
- Setting priorities is the basic step as all things can’t be done at the same time.
- Determine your current income, living expenses, savings and debt. A list of all your current assets to check the compatibility of your goals with them.
- Start preparing your personal budget as planning is useless if you have a budget to work on.
- Differentiate between your actual needs and wants to decide whether your financial priorities are based on your needs or your wants.
- Pay your bills as soon as you get them not only to avoid late fee but also to increase your credit rating.
- Identify the alternative course of action.
- Control your debts because even after paying bills on time and having a healthy budget, we still find ourselves holding occasional debts. We should only take the unavoidable loans but the debts hold us in doing so.
- Evaluate the alternatives
- Investment is a really good option as the monthly income is not enough and you should always look out for more income options.
- Implement your action plans
- Review and revise your plans at least once a year depending upon social, personal and economic factors.
Even if you earn enough, you may not be able to fulfil your financial satisfaction due to lack of planning and management and in order to do that you need to be firm and focused towards your management priorities. A small step can transform your future as well as your near present in a way you want.