By diligently minimizing your spending to essential expenses and / or maximizing your income in order to reach and go above the essential level , you will begin making headway . Read on the article “ How to make a budget without a budget ”.
What now ?
Having done your inventory and determined your minimum financial level , you can have a better idea of your leftover money in order list your prioritized objectives . Where do you start ? Should you pay off your loan ? Or save into a retirement account ? Open a savings account for a down payment for a home ? Increase your emergency fund ? With so many needs and not enough money , what is one to do ?
At this point , the “ growing-up blues ” set in . Relax and be not anxious – no matter what happens , as long as you make reasonable choices , the road will lead you home .
Categorizing Financial Goals
There are four major categories of financial goals : � Emergency savings � Loan payment � Short / Medium-term savings � Long-term / Retirement savings
Most experts recommend funding all of these goal categories , aside from covering your monthly costs , and assigning bigger income portions to your highly-favored goals . However , rarely do things work your way and your limited income may require you to choose one or two financial goal categories above the rest .
Oftentimes , the two most crucial are emergency savings and loan payment . Providing yourself a safety net at a minimum of $ 1,000 is the first on your list ( although the target amount should be enough to cover your living expenses for about 6 months ). With your 1k emergency fund , proceed by distributing your money accordingly for emergency savings contributions and loan payment . You may also want to insert a tiny amount for your retirement savings into the picture -- this could be as small as $ 50 monthly – which is good enough for a lowinterest debt .
Also , remember to contribute to short and medium-term fund savings . For young professionals , you have enough time before you reach 59½ to set aside some money for your lifelong dreams , whether a dream house , raising a family , travel , etc . That refers to money apart from your retirement nest egg or emergencies funds .
However , if your budget will not allow you to contribute to all savings categories , your best solution is to seek ways to increase your income . Saving money and reducing your daily expenses can only do so much . Your ability to earn more has practically no limit whatsoever ; and having the flexibility and freedom that greater earnings provide will further enhance your financial and life aspirations . Financial experts will attest to this fact .
Financial Planning for Novices Review � Assess your financial situation � Set your goals � Make a budget and surpass your minimum cost of living � Prioritize your objectives and set aside surplus money from your living cost � Enhance your income generation for funding higher targets � Relax and enjoy your accomplishments
Breaking it down to the barest components , novices can do effective financial planning using a few essential , practical steps , namely : earn more money , reduce expenses and set aside extra money consistent with your highest goals .
Following these vital tips is your best weapon against the onset of “ growing-up blues ”.