Financial Planning: 10 Tips to Stay on Top of Your Bills

2. Next, do the same thing with your expenses. Just listing the things you spend money on besides the obvious can be a real eye-opener. You may find you’re throwing away a shocking amount on things you don’t need, or don’t need as much of. Knowing this about yourself is vital so you can make a plan to spend more wisely.

2. Keep a personal budget

This is very simply a plan for how your money will be spent.

People have different lifestyles. One of the keys to sticking with your better money habits is to make sure they fit in with your life and priorities.

You could, as many people do, allocate half of their income to basic needs (housing, food), one-fifth to savings or repaying debt, and the rest to leisure (travel, hobbies).

Or you may choose to categorize each expense and decide how much you’ll spend on each category per period of time.

There are myriad resources online where you can learn about all kinds of approaches to budgeting.

3. Set money-saving goals

If you’re just saving for the sake of saving, you may not feel psychologically motivated to keep putting money into that account on a regular basis. Because why not just spend it, right? A great way to get around that and keep yourself committed to saving up is to have a specific goal you’re saving the money for. If there’s a thing you want or need, you’ll be way more likely to keep putting money aside for it, looking forward to the day you can have it.

Money-saving goals can obviously exist on any amount of timeframes. You can be saving for a short-term objective like a new bike, a medium-term goal like having an emergency fund set aside, or a long-term goal like buying a house or retiring.The more specific and realistic your goals and their deadlines, the more successful you’ll be.

4. Limit your spending

Cutting down on your spending doesn’t necessarily mean saying no to the things you love. Take a look at your budget and, especially if you haven’t done so before, or haven’t in a while, you’re guaranteed to find a ton of things to cut back on without feeling it.

Being a conscious consumer is an effective way to limit spending. Before every purchase, ask yourself, “Do I really need this?” Or, “Is this a valuable item to me?”

At home, you can also look for items that you purchased and never used, or haven’t used in a while. This will help you think before you buy. The same goes for monthly subscriptions. Is it worth keeping a service that you haven’t used in months?

Check prices from different retailers before making big purchases, and try to put off non-essential purchases. If you give it a few days, you’ll often realize that seemingly necessary item was not so important after all.

5. Avoid unnecessary expenses

Just as it is important to cut back on expenses overall, it is essential to avoid completely unnecessary expenses. Unnecessary expenses are those that can be avoided or replaced with more economical alternatives. They are good financial planning’s biggest enemy.

Always think thrice before making any impulse buys - be it online or in real life - and definitely limit your credit card usage. Feeling real money drain out of your pockets is a very different feeling than putting off paying for something later.

6. Steer clear of debt

Debt can quickly get out of hand and become a major obstacle to your financial health. If possible, do your best to avoid debt — especially high-interest debt like personal loans or credit card revolving credit.

If you’re already on the hook, the best thing you can do for yourself is pay it off as quickly as possible. First, aggressively go after the ones with the highest interest rates. A good idea may be to consolidate all your debt with a lower interest rate.

Allocate a significant enough portion of your regular income to paying off the debt, and don’t get into new debt while you pay off the old debt.

On the whole, try to pay for things in cash.

7. Set some money aside for yearly expenses

When planning their budget, people often forget to zoom out far enough to realize they have not only monthly, but also yearly expenses. Car insurance premiums, taxes, tuition, holiday presents for the family - these can spring up on you.

Divide the sum total of these expenses by the months in a year, and save up the resulting amount each month.

8. Keep an emergency fund

No one is immune to unforeseen events and circumstances: losing your job, incurring medical bills, or a family emergency. These things can be far less catastrophic if you have an emergency fund that is enough to cover between three and six months’ worth of expenses. It’s not always easy to save up such a large amount, but you should keep these amounts in mind as an end goal.

Build this fund slowly but surely, and keep the money in a place where you can withdraw it at a moment’s notice if you need it.

9. Manage your personal and professional finances separately

If you’re self-employed or own a business, it’s important to manage your personal and professional finances separately. Handling the two separately makes financial management easier.

Keep separate bank accounts for your personal and professional finances. Never mix these funds. This will give you a clear view of your income and expenses from each source. It will prevent tax and planning problems down the road, and it will show you exactly how much profit you’re making from your business.

10. Take advantage of technology

There are so many resources out there now that it’s wild not to at least look into them. Besides Excel and Google spreadsheets, which can be customized to perform nearly any function you like, there are specialized apps for banking and financial planning, and some of them are full-on financial consultants. You can categorize your expenses, set payment reminders, and set auto withdrawal for your savings.

The importance of financial planning in everyday life

Financial planning is more than just avoiding crunch at the end of the month. It is directly linked to your quality of life. When you have your finances in order, you can make better plans for the future, fulfill your dreams, and live a smoother life. In addition, financial planning provides security and stability, allowing you to better deal with unforeseen circumstances and make better decisions in your daily life.

Getting your personal finances in order may seem like a challenge at first. However, with proper effort and adequate strategies, it is possible to achieve a healthy and balanced financial life. By following the tips in this article, you’ll be better prepared to make the right financial decisions, steer clear of debt, and achieve your long-term goals.

Remember, financial planning not only gives you peace of mind on a daily basis, it also ensures security for the future. Start with these practices today and begin reaping the rewards of a more stable and sustainable financial life.

If you’re already on the right track and have a well-built emergency fund, you should start considering the best ways to invest your surplus money in the stock market. Visit the Trader's blog for the best investment tips. And if you’re already investment-savvy, find out how to make your first deposit with FBS.