Getting to grips with your personal finances can sometimes be overwhelming and stressful. It needn’t be. Here are 5 tips for stress-free financial planning.
1.Understand your financial personality
Before delving into the world of financial planning, it is important to first recognise our relationship with money. Let us be truthful to ourselves. If we understand how the financial environment affects us, we can better control our cash instead of being controlled by it! Ideally, we would all like to become rational investors, successful savers, or less impulsive shoppers. However, this is not the case for many of us. Our behaviour around money has become more extreme than a generation ago. We spend so much of our time online, and so online shops, banks and investment platforms never close, thus feeding our impulse to spend, trade or obsess about money and what it can buy. A little introspection at this point is critical, before embarking on a journey to financial fitness!
2. Map your financial journey
Making personal financial decisions without any plan is like setting out on a long journey without a map. Without a plan or a map you risk failing to reach your destination at all. Financial planning means systematically working out and prioritising your goals, appraising your resources, identifying solutions that would work for you, tracking down the most suitable products and providers, and regularly reviewing your progress to ensure your plan is on track.
Common goals for financial planning include: providing for your family, organising where you live, planning for healthcare and retirement, savings & investments and building a pension.
3. Seek professional help
Financial planning can be a complex process. Why not rely on a professional advisor? It is highly advisable to use an advisor where issues are complex or where finding information would be hard or time-consuming. You need an honest assessment of your financial situation and this is best done by an objective third party who is an experienced financial advisor, and who will be able to answer your questions and help you set your goals, as well as, identify appropriate financial products and solutions for you. Consider paying a financial planner to help you structure your long-term financial goals (and if necessary support you in staying on track). This would be money spent wisely.
4. Manage your debt
Everyone has a little bit or a lot of debt. There is no shame in borrowing money to help with cash flow, as long as we make regular repayments to reduce the debt. Easier said than done? No, not if we acquire the discipline of managing our debt as early as possible. Some quick tips for managing debt:
A ) Know who and how much you owe, by making a list of your debts and the dates they are due; keep this list in view
B) Pay your bills on time each month
C) Create a monthly bill payment calendar
D) Decide which debt to pay off first e.g. paying off credit cards is often the best strategy because they have a higher interest rate than other debt.
E) Use a monthly budget to plan your expenses (there are many tools available for budgeting)
5. Invest in yourself
Investing in yourself emotionally, physically, spiritually and financially may be the most profitable investment you ever make. When you invest in yourself a world of opportunities opens up, and your ability to use your skills for the purpose of securing your financial future, increases. Investing in yourself not only involves formal education but also includes expanding your network, reading self-help books, becoming the ‘boss of your money’, giving yourself some time off, knowing and respecting your limits, indulging in self-care and of course, investing for your future (starting as early possible).