Monday, November 10, 2008

Prepare your personal budget..

Everyone have their own budget whether they realize it or not. It can happen without us knowing it. Have you ever think about buying something and start to think about how much money to spend on other things in order to have enough money to buy that "something"? That is what we call as budget. It means that you
plan the flow rate and direction of your money.
This way of budgeting is only suitable for short term and only about few simple spending activities.

However, when it comes to many and complicated spending activities, it is better for you to have proper budget under your concious mind. This will be obviously important for some BIG SPENDING that you will need in the future for example to buy your dream car, house and even to get marry! :)
You can continue to a longer term of budgeting which is for you children's education and support their financial needs in the future.

Some guidelines to be considered for planing your budget:

  • Your budget should match your goals. For example if you prefer to spend more on your car because you love it, then you should plan your budget more on your car.

  • It is wise to calculate how much money you can generate along the budget period so that you know how much is your saving and spending power. This is important so that you will not over budget.

  • It is advisable for you to save at least 10% of your income for you to reap decent rewards of your saving later in the future.

  • Save some money for emergency situation that is not in your plan.

  • Make sure that you list down all the fixed monthly payment that you need to pay for example your car payment and house payment..

  • Same goes to your variable monthly spending such as electric,water, telephone bills, petrols, kitchen things etc.. It's been called as variable because it does not have fix amount of value that you need to pay. You can only set the average value for it and set aside your money according to it.

  • Don't ever forget about your entertainment fund as it is important to help you stay motivated and releasing your work stress. It can be your hobby or something that you do to hang out with your love one or your friends.


Wednesday, November 5, 2008

More about financial planning

Talking about financial planning, it is better to see how you want youself to be during your retirement later. During that time you should not worry about your financial state. You should enjoy more of your life rather than continue striving to earn your income.

Start making the right decision for every things that have the options of which is the best in saving your money while producing the best results. To make it simple we can say that we need to optimize every even little things that happening in our life. The small things will accumulate and able cause big differences in your latter life.

There are few stages in life that we can generally be categorized. It started from childhood life then goes to teen, single adult, married adult and retire/old adult. Each of these stages should have proper planning on how we conduct our decision making process especially about minimizing your spending to get the best result.

There are 5 steps for you to conduct your financial planning:

1. Really know your financial condition
2. Create your goal(s)
3. Produce your financial plan
4. Act according to the plan
5. Do continuous improvement on it

We will discuss more on this later.
All the best..