Do you consider yourself to be people who know their income and expenses for sure, or those who don’t know where the money goes? A survey conducted in Russia shows disappointing statistics: 75% of Russians do not have enough money to pay, and only 5% of our citizens have savings, while the number of loans per share of the population, especially expensive consumer ones, is growing at an appalling rate.
Unfortunately or fortunately, no one but yourself can change your financial situation for the better. There are many simple and effective tools for this, but the first thing you should start with is a personal financial plan.
Plan around the head
Why do you need to start with a plan? The fact is that saving for the sake of saving does not work, you need to clearly understand why you are doing this. And to understand, you need to formulate and write down your goals. They can be anything you want: to go on vacation every year, pay off all debts, save up for a car or an apartment, or maybe even raise capital to live on interest.
All goals need to be formulated in specific amounts, and then plan, by what date and which of them you can realize. The plan will clearly show you how much you need to increase revenues or reduce costs to get what you want, how a change in one direction or another will affect the timing of achievement. Once you have decided on the goals, it's time to move on to drawing up a plan yourself. A blogger named Tim described the 5 steps necessary for this. Let's get to know them.
Rate your current situation
Do you have any debts? Which ones do you need to pay off first? Do you have an airbag? How much do you need to save to form a pillow. How much money do you spend: is there something left at the end of the month or have to go into debt? If you honestly describe your financial situation at the moment, you will see what steps need to be done first.
Map Goals
You probably have a lot of desires. But to realize them all at once is unlikely to succeed. Therefore, you will have to set priorities: which goal do you want to realize in the first place, which one - in the second, on which you can work in parallel. Large goals are better divided into small ones, so they are psychologically perceived easier. For example, you want to save 120 thousand for a vacation with the whole family next year. So 10 thousand should be put aside per month, a little more than 300 rubles should be saved per day.
In order to motivate the goal map more strongly, you can compose it in the form of a wish board with pictures or something like that.
Keep track of income and expenses
Planning without knowing the specific numbers is impossible. Therefore, you can’t get away from accounting, even at the initial stage, while you still do not have accurate data on income and expenses. Even if you think that you know how much money you spend on a particular budget item, you still need accounting, in fact people often find that they were mistaken about the amount of their expenses.
Get a positive budget difference
The next step is to make sure that incomes at least a little, but necessarily begin to exceed costs. If you do not achieve this, you will not budge. Only through so-called profit can you realize all your goals. You can cut costs, increase revenues, or work in two directions at the same time.
Calculate exactly the amount of your monthly plus difference. It is you who you will use in your personal financial plan in order to calculate the timing for achieving your goals.If you want to shorten the time, increase the profit margin. Everything is simple here.
For long-term goals, connect investment instruments
If the goal is short-term, then for savings it will turn out to use only a bank deposit. If the goal is 5 years or more, for example, if you save for a child’s education or want to generate capital for life at interest, then it’s not profitable to use a bank deposit. Learn simple collective investment tools: mutual funds, ETFs, they will not only save capital from inflation, but also increase it faster thanks to the compound interest effect.
But the most important thing is to act, at least a little, but to move in the chosen direction, take regular steps, because even the most wonderful financial plan does not realize itself.