Personal Finance Planning: Today everybody seems to be in a hurry to gather more and more money. From an employee to a businessman everybody wants to grow, but only a few among us become rich or millionaires and achieve great success while some of the millionaires fall down sharply after attaining great success. Do you know why? The reason lies in the secret of managing the finances wisely. Let us read the article to know about how to plan your personal finances and the top money management tips and habits that can lead an individual to success.
Personal Finance Planning: What is Personal Finance?
- Everybody understands the value of money, therefore in simple terms, the effective management of personal money of an individual to attain its long term and short term life goals is Personal Finance.
- On the basis of how an individual manages its finances, the financial worth and other related values vary from one individual to another.
- Therefore, for an individual or a businessman it is necessary to know how to manage your money wisely to make the most of it. Let us know about top money management tips further.
Money Management Tip 1: Set Financial Goals
- One of the major tips for effectively managing your money is by setting financial goals. It will help you in deciding the direction and purpose of your investment or saving.
- SMART (Specific, Measurable, Achievable, Relevant, Time Bound) criteria ensures clear and attainable goals with no bogus entries.
- Assessment of current financial situation, setting your priorities at first, creating a SMART plan, reviewing the progress and adjusting it accordingly, these steps can help in setting up appropriate financial goals.
- For example, Consider a long term goal and in a disciplined approach that you want to save INR 50,000 for a down payment of a car during college times. Specific: Save INR 50,000, Measurable: save INR 500 per month, Achievable: Cut down on non essential expenses, Relevant: Car is now a necessity like home, Time Bound: achievable in 8 years 4 months.
Personal Finance Planning: Money Management Tip 2: Creating a Budget
- Assessment of your income sources and corresponding expenses involved is basically the part of creation of a budget.
- Suppose if we want to take out money for saving or for repayment of a debt then we need to prepare the budget first.
- For example, we will have to take out all our sources of income (fixed + variable) and sum them up, say INR 90,000 for a month, along with this we need to calculate all our expenses which comes out to be INR 40,000 for a month. So we can invest INR 50,000 for a month in repayment of debt or in any savings.
■ Also Read: All you Need to know about How to Start a Business in 2024
Money Management Tip 3: Saving Strategies & Debt Management
- Personal Finance Planning: Saving strategies are the key in deciding the future of a family or an individual. The heart of a family is its savings and in case of any unforeseen circumstances like job loss or any such situations like these, the savings of an individual is utilized.
- One should use the 50/30/20 rule to effectively manage the after tax income. It includes spending in the following way:
- 50% of the income on your needs, for example expenditure on rent, car payments, groceries, utilities, insurance and health care, debt payments etc.
- 30% of the income on your wants, these can be cut down, for example, if you can cook at home instead of eating out, if you can watch a sports match on TV instead of buying tickets, it all varies from one individual to another.
- 20% of the income on investment & savings, for example, automated transfer of some amount of your income to a savings account every month.
- A proper debt management will ensure that your savings are not exhausted while clearing all your debts. For example, if you have two debts, one with a high interest rate and other with a low interest rate, then try clearing the high interest debt first. This method is called the avalanche method of paying debts.
Personal Finance Planning: Money Management Tip 4: Tax Planning
- Personal Finance Planning: Tax planning for an individual varies on the basis of interest. For example it cannot be the same for an individual and a businessman.
- Effective tax planning is the methodology to organize your finances so as to cut down your tax liabilities.
- For example, while filling your ITR, an individual can utilize tax deductions on Health and Life Term insurances and many other factors.
Excessive Money Leads to Destruction
In spite of learning how to manage money, excessive money can still cause a lot of problems. Since the inception it has been proven a number of times that excessive money has always ruined fortunes of some of the greatest of all times. For example King Ravana in Treta Yuga was destroyed and killed in spite of having a palace made of Gold. Kabir Saheb says:
Kabir, Yeh Maya Atpati, Sab Ghat Aan Adi |
Kis Kis Ku Samjhaun, Kuye Bhang Padi ||
Only by getting aware about the real wealth of True Spiritual Knowledge, one can attain the prime goal of this human birth which is salvation. Sant Rampal Ji Maharaj from Haryana, India is the one and only Complete Saint Who is giving us the true spiritual knowledge and true worship as given by God Kabir and mentioned in our Holy Scriptures.
For more information visit www.jagatgururampalji.org or you can visit ‘Sant Rampal Ji Maharaj’ youtube channel.
