When we talk about financial planning, we think about saving enough money for our future. This is indeed the backbone of the financial planning process, but what about the present moment?
Life is made up of experiences, both planned and unplanned, and having a solid financial plan in place can help you enjoy the moment with peace of mind about your future.
Smart financial planning doesn’t mean that you should save all of your money and never spend it on anything else. Instead, a good financial plan can help you do both.
Planning for retirement should definitely be one of your biggest financial goals and we have put together a few tips to help you do so, while still enjoying the joys of youth.
Before deciding how much you want to save, what you want to save for and how much you want to spend, it’s important that you first understand your current financial situation.
You need to know what your total income is, your total expenses and what your average spending habits are.
By knowing where your money is going to every month, you can identify where you are spending unnecessarily.
For example, ask yourself, do you eat out more than once a week? Do you make impulsive purchases on non-essential items?
If the answer is yes, then a good place to start is to cut back on these luxuries and allocate that expenditure towards saving instead.
You can save for short-term goals such as a family road trip, medium-term goals such as buying your first house or long-term goals like your inevitable retirement.
Either way, saving is a crucial part of financial planning and will help you get the most out of today and tomorrow.
Knowing what you want to achieve from your savings plan can help you avoid the temptation of indulging in anything that may hinder you from your goal.
This can be seen as a self-reward system, where you get to realise your dreams by making smaller (non-detrimental) sacrifices in your day-to-day life.
There are some expenses that cannot be avoided; rent or bond payments, utilities and student loans are some examples.
However, there are some expenses which can be seen as unnecessary. Buying a brand-new car when you don’t need one or opening various clothing accounts to buy on credit are good examples of non-essential expenses.
By keeping your non-essential expenses to a minimum, you make more money available for the purpose of saving up.
It’s easy to have various accounts associated with your main bank account. This could be a fixed savings account, a tax-free savings account or a flexi-savings account.
Whichever account you may have in addition to your primary bank account, you can arrange for monthly stop-orders to come from your main account into your savings account of choice.
By doing this, you know that a specified amount is going to be taken from your account each month so you prevent yourself from spending it instead.
In addition, you can easily track your savings, which is key in motivating you to continue saving more aggressively.
It may sound like a paradox, but saving especially for unexpected occasions, you protect the money you are saving for your future or retirement.
Whether it be a spontaneous getaway, or your favourite band is coming to town, you now have money to spend freely without jeopardising your safety net.
When it comes to financial planning, it’s no secret that your biggest goal should be to secure your future.
However, you want to still enjoy the journey towards your retirement while knowing that once you arrive, you will be financially secure.
Our qualified financial advisors can provide you with the advice you need to help you live for today while planning for your future. For more information, please feel free to contact us.
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