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Easy Ways to Organize Your Financial Life

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Easy Ways to Organize Your Financial Life

Financial planning

A person seeks ways that lead to a state of stability in the various affairs of his life, starting with the basics, such as health, education, safety, ensuring freedoms, rights, a decent standard of living, social status, and ending with various luxuries, knowing that all these components are not linked in a chain And it does not contradict, and it is worth noting that some aspects of life are based on others, and perhaps the cornerstone in this context is ensuring excellent income at the personal and family level, and the continuous endeavor to increase it, and rationalize its consumption; Therefore, financial planning requires first of all knowledge in financial management laws, planning skills, and decision-making wisely, responsibly, and deliberately.

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Financial planning is not a kind of cognitive luxury, and it is not an optional step to reach financial success on the personal or family level. Rather, it is like a personal profile that puts a person in the picture of his financial situation now, and he is moving towards developing the financial level in the future with clear indicators and indicators. It is measurable within a specific timetable, and thus financial planning is more like a clear-cut map from its starting point in the present to its end in the future defined by the date of achieving its goals, through evaluation points, and the periodic measurement of the volume of expenditures, the percentage of income, savings, debt, and it is worth It should be noted that the application of the concept of financial planning is the basis for the success of every investment we see around us.

How to improve your financial life

Steps to implement the personal financial plan and achieve its success

Some people may think that the abundance of financial revenues and the obligation to spend expenditures without increase or extravagance, alone contribute to achieving self-sufficiency, and that the surplus will certainly be saved or invested, but the difference is clear. Research on the Federal Reserve in the United States of America indicates that one-third of Americans whose annual income reaches more than $ 100,000, spend all of their annual income without any savings and that one in ten of them spends more than his annual income level, and therefore there is abundance. Money does not necessarily mean that it is well invested, managed, satisfied, and not overlooked in extravagance and wastefulness, although the opposite is true. Good management of revenues and expenditures and good financial planning predicts an improvement in the standard of living and an increase in the proportion of income, bearing in mind that some important steps contribute to the organization of material life, which are as follows:

  • Stopping spending on luxuries even if financial revenues grow: the desire to spend on luxuries increases with the increase in income, and if a person complies with those desires, he will not stop spending on luxuries until the end of income and savings, which means returning to the zero points; Therefore, a person must write down his expenses, and commit to not exceeding them.
  • Ensure to save from every financial income: saving is the first step in investment, and it must be started before the revenue is spent. It is not necessary to dispose of financial revenues until after saving the savings percentage, which is recommended that it does not exceed 15% of all revenues.
  • Saving from a reward as much as possible: when a person gets a financial reward; In recognition of his achievement at work, or something else, it is natural that he spends it on the weekend, or travel, but it must be remembered that this reward may not be repeated. Therefore, care must be taken to seize it, and save from it as much as possible, and thus this ensures real growth of a person’s savings.
  • Determining the percentage of costs allocated to entertainment: Entertainment must have a share of the monthly revenues, but the most important thing is that these expenses are controlled and codified, and it is recommended that the costs allocated to entertainment do not exceed the barrier of 20% of the monthly income, and it should also be noted that Entertainment is not limited to family trips on the weekend, but includes personal care supplies, clothes, hobbies, buying food from restaurants, and frequenting cafes.
  • Consultation with specialists: A person should not hesitate to consult specialists, or those who see them in good judgment, and their behavior in organizing their material life when he is confused about his matter regarding his financial affairs, so the owner of knowledge and prior experience will shorten the way with his advice.
  • Dividing the monthly income according to the plan: the monthly income must be distributed according to the basic expenses by 50% of the total income. This is to ensure the control of expenses, bearing in mind that these expenses include rent payments, loans, transportation fees, water consumption, electricity, fuel, household food, and other household necessities, and 30% of the monthly income must be allocated to financial priorities. Half of it is for savings, the other half for medical expenses, insurances, and retirement, while the remainder of the monthly income, which is 20%, is devoted to entertainment, personal care necessities, clothing, family trips, visiting tourist places, entertainment, and visiting restaurants.

How to organize your financial life

Benefits of personal financial planning

The rules of financial planning in their general form do not differ between those who possess great wealth and those who are still at the beginning of their path to achieving it. The broad lines are defined by clear, time-bound, and measurable goals with reliable guarantees. For the continued increase in the property, or the monthly income, and in return, it is not eroded and collapsed, and this principle confirms that the importance of financial planning lies in its feasibility and practical results, regardless of the size of the current wealth, the nature of the standard of living, and income, knowing that one of the most important benefits of organizing affairs Finance and financial planning include the following:

  • Organizing expenditures and financial revenues according to specific dates according to obligations, such as deadlines for repayment of education installments, loan dues, or rent payments, and so on. This allows the individual to have greater control over expenses outside this range, so they invest in savings, for example.
  • The ability to deal with emergency circumstances that may require large expenses; This is due to flexibility in financial planning, as it is a strength that should not be dispensed with, as each age stage has its requirements that must be prepared for, and among the emergency, variables are those that occur in the global and local market in real estate, fuel, health expenses, education, and when available Flexibility in preparing and implementing the financial plan. All these variables are handled appropriately.

How to organize your financial life

Reasons for the failure of the financial plan

The occurrence of some errors, or making ill-considered decisions, may cause the failure of the financial system, no matter how tight and accurate the financial plans are, and it is necessary to study the available alternatives and the expected possibilities shortly. So that a person does not fall into the trap of rushing, especially when marketing an investment idea to him, and these are some examples of decisions and actions that should be avoided; To ensure the success of the financial plan:

  • Hurry and lack of deliberation: the increase in property and assets is one of the most important guarantees of the stability of the financial plan and an indication of its growth, but it is imperative not to hurry to achieve this in the beginning, so buying a new home, or starting a big project, may burden a person in the long run, Or he may stop saving from surplus income, and this impedes the continuation of his financial plan; Therefore, it is necessary to study the opportunities well before making a decision, such as: knowing the time and place of the project, the target group of it, the return on investment in it, and others.
  • Waste saving: It is worth noting that the path of a thousand miles in investment begins with the saving step, and giving up on that contributes to the loss of the financial plan, bearing in mind that the importance of the savings strategy is that it represents a financial reserve that can be referred to in the event of losing the main source of income, and it is also The capital of any investment project that the person wants is to directly implement it, and therefore these two problems are the biggest fears, and the obstacles that saving can be the final solution to, by placing all financial revenues in one bank account, which facilitates the ability to spend from them. It is better to open an account for periodic expenses, and a savings account dedicated to savings.
  • Neglect of investments: Stopping to pursue private investments or despair from them, leads to a gradual loss, and it is worth noting that good planning and skillfulness contribute to the success of any investment project.

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