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Top 10 Tips for Managing Your Personal Finances

We all have personal financial goals. Whether it is owning your own home or sending the kids to your preferred college. It could even be the purchase of a second or holiday home or buying a new car. It could be whatever your heart desires. No matter what it is, you would require proper financial planning in order to make it a reality.


Image credit Chris Potter, CC BY 2.0

This is where we can help. We can help to guide you on how you should proceed to manage your personal finances to achieve your goalposts.

Setting Priorities

Don’t confuse yourself and make things unmanageable by trying to do everything at once. Decide which goals you wish to achieve first. You can place the rest in a descending list of priority.

Making a Budget

Track your income and expenses to find out where there is room for improvement. Try to get your spending under control to get the most out of every dollar.

Build a Nest Egg

Now that you have identified in your Budget where you can extract savings, you need to build a Nest Egg. You never know when you will need money for an emergency or unforeseen expense. Building a Rainy Day Fund of 6 months worth of expenses can see you through this rough weather.

Choose the Correct Banking and Savings Options

Find out all you need to know about opening a savings account. The facilities offered as well as the costs, fees and charges involved. This is where your money should be kept. It should be easy to access.

Buying a Home

Usually the first and biggest investment for most people is their own home. Make sure that the monthly EMI is much smaller than your salary. Otherwise choose a smaller property. It is necessary that you do not stretch your Budget to meet the mortgage payments. We have seen in the Great Recession what this did to households.

Invest Wisely

Once you have sufficient funds in your Rainy Day Fund and you have built a comfortable Nest Egg, it is time to think about how you can get a better return on your money. There are a variety of options to choose from to invest in. Study all the necessary details and consult you’re Financial Advisor, if necessary. You should choose products that you are comfortable with.

Controlling Debt

You have done a good job of managing the money that you have. You also have to manage any debt that you may have, as well. Sometimes, it is more important to manage this debt than your own money. As this debt is somebody else’s money too.

Reduce expensive debt first, such as credit cards. And pay off the rest of your debt before you retire too. It is better to return other people’s money before you start to think of where to invest your own.

Life and Health Insurance

Insurance is an important risk management tool. It is an essential part of any financial planning. It helps to prevent any major shocks to your personal finance plan. You should be insured for 10 years of your current earnings. Insurance should be adequate but not so much that it is a drain on your Budget. Your Health Insurance should cover major risks that you might be exposed to.

Taxes and Estate Planning

Since your active income will stop when you retire, you need to be particularly aware about any expenses and outgoes that you are liable to incur. Tax is obviously one of these. It is not necessarily as baffling as it sounds.

A good tax consultant will be able to advise you on the best course of action to take to reduce your tax liability. This should be done well in advance of your retiring, as some decisions regarding your tax liabilities will have to be taken many years before you finally retire.