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PERSONAL FINANCIAL PLANNING

Personal Financial Planning can be considered as a very pursuable career path that enables people to assist others to achieve their financial objectives in terms of financial planning for the future. Because of this, being a financial planner, one must be aware and be in a position to execute various aspects of money management. Below are three simple techniques that form the core of personal financial planning.

    Firstly, In personal financial management, the most important tool is budgeting. A budget can be defined as designing a plan that factors in all possible revenues and expenditures for a specified period, usually the month. This technique makes is easy for any person to see where his or her money is being used and can make adjustments where necessary. A good example of how budget can be classified is by differentiating between fixed expenses such as rent and utilities as well as variable expenses such as entertainment and dining out. These expenses can be really useful if an individual is planning on having the capacity to live a certain lifestyle because it will allow them to not go over the limit, avoid using credit, and invest in savings and stocks. On the other hand, variable expenses include costs that can vary each month, such as entertainment, dining out, groceries, and travel. These expenses are more flexible and can often be adjusted based on financial priorities and goals. Therefore by putting expenses under different categories, people can easily be able to withdraw funds and spend according to their plan. For example, if the intention is to save for a special purchase or perhaps investing in stocks, finding how variable expenses can be cut down is essential.

    Secondly is about saving, savings refer to the act of not spending a part of the income that one has at his or her disposal but rather putting it aside for future use and is a significant component in attaining the desired financial status. The relevance of saving is establishing an emergency fund that in fact consists of funds that cover the amount of money that is 3-6 months of an individual’s living expenses and serves for unpredictable incidents, which may encompass medical issues, job loss, or critical repairs without the utilization of credit or loans. Also, it enables people to meet important expenses that require major investments, such as the purchase of a home, a car or education, free of debt. For me myself, my parents highly recommend me to do my own saving since i was a child because they want to reduce any uncertainty things that could happen to our family and will affect our property. Other than that, It also provides various means through which people can invest, with the intent of making extra money and creating wealth in the long run, to cater for the people’s needs when they grow old, retire and the likes. In addition, there is security that comes with having money saved because one knows that there is cash saved to address some mishaps and future obligations, which contributes positively to your fiscal health

    Lastly is avoid from any debt, debt should be avoided where possible as it leads to financial problems and hinders the achievement of financial objectives. To be free from debt it is necessary to make and follow the budget and write down one’s income and expenditure and also decide how much one can afford to spend on desires. There’s a way to avoid debt, you can create and stick to a budget. You may tracking your income and expenses or categorizing them and highly recommend you to set a limit on your spending so you won’t spend more than you should. By doing so it will helps you manage your finances more effectively and efficiently, at the same time it allows you to allocate funds towards essential expenses, saving and investment without relying on credit. Besides, having a clear budget will helps you identify areas that you can cut your costs and redirect your savings towards building an emergency fund.

In conclusion, Pursuing a career in financial planning requires a deep understanding of effective money management techniques. Furthermore, doesn’t matter which field are you pursuing in as long as you arrange everything well you can safe from any debt or anything similar to it that makes you overspend and lost money.