25 Simple Financial Planning Tips For Beginners

Achieving financial freedom is a dream goal for many people out there. It means having enough savings, investments, and cash on hand to afford the lifestyle you want for yourself and your family—and a growing nest egg that will allow you to retire or pursue the career you wish to without being driven by earning a certain amount each year.

Unfortunately, personal finance/money management is not a subject in most schools or colleges. The lack of primary financial education leaves many youngsters clueless about managing their money, applying for credit, and staying out of debt. Now things are changing. High school students now have the option of choosing personal finance, and starting their financial journey by getting an accurate picture of their money.

So here are a few ways how you can start on your financial journey:

1. Take a Quiz

Answer simple questions to measure your financial wellness and get ready for making some adjustments. Take again in some time to see if your story has changed.

                                         Measure Your Financial Wellness on Wizely

2. Know Your Sources of Income

Before making any improvements, you need to get a picture of your finances. Start by tracking your sources of income.

3. Track Where Your Money Goes

For getting a grip on your money, you need a system that allows you to track your daily expenses on an ongoing basis. Find and stick to a plan that works best for you.

4. Note Down Due Dates for Bills

If you have trouble making your ends meet. Note down the due dates for your bills on your notes or in a calendar wherever suitable so that you can look at them regularly as you plan for the coming month.

Minor Changes are Always Impactful

Few quick changes and you can take turns on your finances. After getting an accurate picture of your money, follow these tips to align your expenses with your income:

5. Create a Budget

Cash flow keeps track of where your money comes in and when and where it goes out. Looking at it every week, especially if you tend to go through shortcomings, can help you create a monthly working budget.

6. See If You Can Extend Your Due Dates

If you see the dates of due bills as major, when money is tight, you can contact the person in charge and request new due dates that better align with your income.

7. Track Your Expenses Every Month

Track your expenses now and then. Sooner you will realize the places where you can make adjustments that do not affect you too much and help you move more into your savings.

Emergency Fund is Important

Saving money might feel hectic sometimes, but consistently putting away a small portion of your money can make a significant impact in the long run.

8. Create Security with an Emergency Fund

By putting aside small portions, you can cover many common emergencies, such as a medical bill, a family emergency. Keep a dedicated savings account for these unexpected emergencies so you can get a better take on your overall finances.

Read more: All About Emergency Funds

9. Make Rules for Your Emergency Savings

Setting guidelines for when you can spend these savings is crucial, but if you need it for something equally important, don’t be afraid to use it. That’s what it’s there for. Just remember to rebuild it again.

10. Set Up Auto-Transfers

Ask your bank or your employer to set an automatic transfer into your savings every week or month to keep your savings game intact.

11. Save Up Your Bonuses

Take that bonus or incentive into the saving goal amount when you can.

12. Use Your Tax Refund

Claiming a tax refund amount you receive at the end of the year can help you make a pitch for an extra pile of money. Make a plan to dedicate a portion of that money to your savings to reach your goals before the timeline.

Read more: 10 Income Tax Planning Tips for Salaried Employees

Lower Your Debts

Paying debt can be challenging, but you can always make that happen with a perfect strategy.

13. Know What You Owe

Before making a plan get a sense of the amount you owe, including the interest rate and payoff date.

14. Finalize a Debt Reduction Plan

There are two common ways to pay your debt: the highest interest-rate method and the snowball method. Learn about them and pick whichever works best for you.

15. Learn About Debt Repayment Options

Whether it is federal or private student loans or a combination of both, start with whichever you are most concerned for, and learn how to work fast to pay them off.

16. Negotiate, if Possible

Make a plan for ahead, and learn what is negotiable till what amount.

Good Habits

Improving to manage your money regularly may take time and dedication, but if you develop better money habits, you will create a financial journey you are proud of.

17. No Credit Cards Until There is a Need

While it’s one of the many factors, it sure helps you with an excellent score for your financial wellness.

18. Review Your Credit Reports Often

You have access to free credit reports every 12 months, so set a reminder to review them for any errors that should be fixed.

19. Set Up Alerts

You can set up alerts in almost all banks to notify you of your account balance if your balance gets low. This helps you keep a check on your accounts and protect it from incurring any additional overdraft fees.

20. Be Spontaneous to Call Your Dealers

Missed a bill payment? This can do a negative impact on your finances. Contact your dealers in such emergencies and see what options may be available to you.

21. Get Multiple Quotes When Getting a Loan

One of the most innovative ways is to check around and get estimates and compare terms and fees. Works for all kinds of loans.

Success Planning

Planning for the future is always helpful; always set goals for what comes next. By working out on a plan, you can have a roadmap to guide you throughout.

22. Set SMART Financial Goals

Specific, Measurable, Achievable, Relevant, and Time-bound. Set actionable SMART goals that can help you reach your dreams.

23. Set Up Separate Saving Accounts

Creating separate savings accounts can be helpful if you tend to spend money from your current accounts. Do not touch the money in your savings accounts until you absolutely need it.

24. Be Consistent

Consistency is the key to get your savings to grow. Set your own rules and plan on how to achieve it

25. Prepare for Large Purchases

Start mapping out life events that will require large purchases, so you can begin saving today.

There is no right age to start your financial planning. It is a habit that you should learn as soon as possible and understand your financial goals and design a plan that will help you achieve them.

Sakshi Mehrotra

Sakshi Mehrotra