Monday, June 15, 2009

Complete Financial Planning

Complete Financial Planning

Financial planning encompasses a whole range of topics about money - budgeting, expenditure, debt, savings, mortgages, insurance and retirement. Working with a good budget is laying the groundwork for a strong financial foundation for yourself and your family, and the younger you are when you start, the better.

Everyone follows some kind of a budget, whether it is simply in their head or on paper. You know what your income is and you know what you spend. But sometimes you really don't realise just how much you are spending and how this could be changed to give you more money. It is possible to waste your money in ways that you wouldn't at first think of as wasteful.

It is only when you take a good, hard look at your expenditure and keep track of every cent you spend for at least a week that you may be able to realise just where all that money is going to.

Many people start at the end of their life and work backwards to find out what kind of budget they should have. That is, they work out what will be needed to live on at retirement, and then work out how much must be saved per week to achieve that goal. Others only get as far as a more short-term goal such as taking an overseas trip, or planning for their children's education. Whatever type of budgeting you do, unless you include every aspect of your life, it will not be adequate.

Once you have a comprehensive budget you will be able to see just where all that money is going to and you may then wish to channel it in other directions. This can be as simple as taking lunch and coffee to work instead of buying it. You can save upwards of $50 per week in this simple way - $2,450 at the end 49 weeks of work. Or maybe you could replace that soda with more healthy water and save an extra few dollars. Chips and lollies are treats that can be kept for special occasions instead of munching on them every day. You can save a small fortune over a lifetime in this way. You'll save on dental bills too.

Getting out of credit card debt is another important part of budgeting. With interest rates as high as 24% in some cases, this adds a great deal of extra money to your shopping bills. So, once you are on track with your budgeting and saving, you now need to make sure there is adequate insurance. Accidents and disasters don't always happen to the other person; sometimes it is you. Don't risk losing everything just because you didn't want to spare the money for insurance.

By: Mel C
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