Planner

Personal Finance Planner – First Step Towards Financial Freedom

Personal Finance Planner

Would you like to be more in control of your finance on a daily basis, improve your finance health, or perhaps, you have a financial freedom goal? Whatever the case may be personal finance plan is key when it comes to achieve your financial goals. Budgeting is a critical step in this process, therefore, it’s essential to understand what is that, how it works and how a personal finance planner can help you to create this important habit in your life.

Ready? Let’s get started…

What Is Budgeting?

There are shocking statistics out there, which tell us that only a few percent of the population has a basic understanding of the need to budget and have savings. Can you imagine a government or any major corporation operating successfully without a budget? I am sure your answer is as good as my guess, but it appears the majority of people are overlooking this vital aspect of their finances. We have to be extremely financially responsible to live a happy financial life.

But what is Budget? Simply, budgeting is a financial analysis and a true reflection of your circumstance in terms of revenue and expenses over a period. Usually, it is done for a year. However, it something that you would like to revisit often. It’s a straightforward technique yet extremely useful to manage individual’s or family’s finance. Budgeting includes a mechanism for setting aside money for your expenses, savings and investments. It can be a life and money saver, and a reality check that tells a true story about your financial health. It is something that everybody should do, independent on how big their bank account is.

Why Budgeting and Finance Plan

The major reason for budgeting and financial planning is to ensure that you are living within your income – and not spend more than what you earn. With a realistic budget planning, you can track how much you earn and where you are spending too much money for timely refocus, which is the first step to financial freedom. It creates extra money for you to use on other important things instead of spending it on things you do not even remember buying. Budgeting helps you and your family to focus on common goals, unifying the family in the effort and mutual purpose towards a successful outcome and reward. In addition to that, it also assists you to prepare for emergencies or unforeseen expenses that might otherwise knock you for loop finance. Overall, a budget lets you control your money instead of your money controlling you.

However, in spite of all these wonderful reasons for budget and financial planning, many people still overlook budgeting as a standard practice. To be fair, some of them make an honest attempt to budget but got discouraged and give up before they are able to accomplish any significant financial gain. Does it sound familiar to you? Furthermore, it cannot be overemphasized that a positive mindset about money and budgeting is essential to your financial success. If you see budgeting as a penny-pinching, financial diet, financial handcuffs, a sacrifice, restrictive, etc, then you are bound to fail. A positive mindset means you consider budgeting as a way to end your reckless spending and to achieve your dreams and goals. Always remember to be grateful for all the money you have now and for all that is coming.

==> Check out here if you want to learn more about The Importance of Gratitude <==

Effective Budget Tips

Creating a budget can seem like a daunting task for many people to accomplish. However, with a clear understanding and effective tips on how to create a budget, as the ones highlighted below, you will be more in control of your finances.

  • Create a list of your income – Be sure to include your entire income source in your planner – be it regular or part-time. Add the numbers.
  • List out all your monthly expenses – You would want to break down your expenses into groups, say Home, Car, Living, and Miscellaneous. The Car will be things like Insurance, gas, car maintenance. The living will include things like food, entertainment, clothing, etc. Miscellaneous will be anything that does not seem to fit in other areas such as credit cards and personal loans. The next thing now is to start listing what you are spending on each item every month. If you are not sure how much these costs, simply save your bills and receipts for the following month to have a more accurate idea. For items that you do not have receipts for, you will need to take the best guess. Now that you have a basic budget for where to spend your money, the next thing is to go over the list and see if there is anything you missed or forgot to add. Calculate your expenses and see where you might be able to cut back.
  • Do some calculations – Is your monthly income enough for all your outgoing expenses? Subtract your monthly expenses from your monthly income. If your monthly income is not enough to meet all of your monthly financial obligations, then you would need to consider reducing expenses in some areas. One major area where you can save money is in eating out and entertainment. If your monthly income is more, then it is time to consider how you can use some or all of that extra money to pay down your debt or do some investments.
  • Create a budget – Once you have been able to work out your income and expenses, it will be easier to create a budget. While creating your budget, make sure it is realistic and stick to it. Be thorough with how to reach your goals and occasionally review your plan. Creating a budget in an ongoing learning experience and will take some time to perfect. Just stay with it for about 3 months and you will be in charge of your money. Is that not how it should be?
  • “50/20/30 budget rule” – Senator Elizabeth Warren popularized budget rule in her book, All Your Worth: The Ultimate Lifetime Money Plan. It states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.
  • Envelope System – That is another budgeting concept. It advises you to keep separate envelopes for your spending categories and populate them with cash from your income source. When a bill comes due or you need to go shopping for food or an item you need, you simply pay for it with cash from the appropriate envelope. I personally use this concept combining the physical envelope idea with virtual envelopes (different bank accounts). It is really a powerful idea that I truly recommend. See some options below.

         

  • Automated Budget – You do not have to be a professional to use automated personal budget concept. The idea is simple. When your pay check hits your account you automatically split the money into specific accounts. Pay yourself first setting aside money for emergencies and retirement, then set up payments for your bills and expenses, following by your investments. It will put your finance in auto pilot mode and avoid undesired behaviors. However, for the effectiveness of this concept you have to write down your fiance goals first, check what are you spending your money with, where you can save a little on a daily basis. It is an interesting concept. For more details on this idea I recommend “The Automatic Millionaire” book by David Back. He also has another book, which I like, that is called “The Latte Factor” that helps you to make small changes on a daily basis that can have a huge impact in the future.

Choosing The Best Personal Budget Planner

Now that you have a better idea about Budget let me introduce you to Budget planners. They are a great tool you can use to define and achieve your financial goals. They make it a fun and enjoyable task to assess your finance health, identify and track your expenses, evaluate and analyze your current spending habits, and see where you are spending more than necessary – provided you put them together effectively. Ultimately, it will help you to get out of debt, maximize savings and investments, and eventually, achieve your financial goals.

All you need to do is to record your family or personal income details and expenses on a daily basis.

In a simple budget planner, you can write down your monthly financial goals, include reminders related to bills and payments due on the calendar. Plan your monthly expenses and group them into categories such as transportation, housing loan, savings, insurance, health care, miscellaneous, etc. Then you can track your plan and in the end of the month review and improve for the next month.
You will be able to manage all of that without any headache.

These personal budget planners are available at little cost to you and extremely easy to use, just waiting for you to embrace and try them out. Many budget planner are available out there, and some times it is hard to choose one. Don’t worry I have selected some options for you.

The planner in the first row have a more complete view, and therefore, they are more expensive. However, they will guide you to the entire process of plan your finance life.

   

If you are looking for a more simplistic budget planner, this second group are cheaper and have all the main features that a budget planner should have. It will do the work!

          

Takeaways

If you want to improve your finances, you need to take a bold step to create a budget, and then follow it.

Budget is a financial analysis in terms of revenue and expenses over a period. It is a simple technique yet extremely useful to manage individual’s or family’s finance.

Budget planners are great tools you can use to help you to define and achieve your finance goals. They make it a fun and enjoyable task to assess your finance health, evaluate and analyze your current spending habits, track your expenses, and ultimately, build your finance freedom – have enough money to live the live you want without have to worry about money ever again.

I would love to hear from you. Do you have a budget? Does it work? Leave a comment below.

Financial Disclaimer: The content presented in this blog are based on my opinion and experience and it is for informational purpose only. It shouldn’t be considered professional financial advice.

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10 Comments

  1. Wow! I absolutely am impressed by all this information! I have to admit, I had no record of my finances when I was younger and that was the main reason I decided to take a stand and create a budget for myself. I was spending way too much on coffee and creating a budget helped me see that and cut that cost out. It was really really hard work, to be honest. If only, I had all this info that you beautifully laid out to help me back then! Even still, I have learned a lot of useful takeaways from your article and I am looking forward to implement them asap to my own finances. I like that you listed your top picks when it comes to budget planners that are out there on the market. Makes life a lot easier when it comes to choosing.
    I strongly feel that they should teach this as a mandatory course to every student in school so that they learn to self-discipline themselves to financial freedom.
    Anyways, thank you for putting together everything so wonderfully! I will be sharing your site with my younger cousins and everyone else as well! 🙂

    1. I’m glad to hear that and I agree with you, this is a subject that we should learn in school. Unfortunately, we don’t and most of time we learn it in the hardest way. I found planners are really helpful to be aware of your expenses and habits relates to money. When you worked out your budget well then you can thing about to automate it. It’s a fascinating subject 🙂 thanks for sharing and good luck with your finance goal$$$.

  2. Thank you for bringing this information to us. It’s something I could have done with a few years back.

    Never really thought about budgeting in the past and always lived in the present.

    I have never spent outrageously and have always had enough to make ends meet.

    It was the planning ahead that I had a problem with because in my mind there was always something around the corner that would put a dent in it.

    Once again thanks.

    1. You are not alone on that. Most of people don’t plan for the future. I’d we need to live in the present but with an eye in the future. Budget Planners are amazing tools to help us on this journey. Thank you for your comment and all the best for you.

  3. Thank you so much for this highly informative article! I’m a millennial, and I’ll be the first to admit that our generation is terrible when it comes to saving money-many of us blow through money like leaves blow through the wind (that’s a shame). I definitely understand the importance of budgeting/having a financial plan, especially since I’m in the process of trying to buy my first home and a new car. We must have money saved up to be able to realize our dreams-equity is not cheap. I have saved your site and will definitely share it with my friends and family. God bless you!

  4. This post is so eye-opening. Honestly, I have always had trouble fitting into what I earn. You know, as the earnings get higher, the expenses increase too. Now I know exactly what to do, come up with a budget and stick to it. Especially the 50/20/30 rule, that’s genius. I’m definitely getting a personal budget planner. Thank you for sharing.

    1. Glad to hear it inspired you. The 50/20/30 rule it’s simple to apply and really helpful. The book All Your Worth: The Ultimate Lifetime Money Plan I mentioned has a lot more details on how to implement it. I use a mix of this rule and the envelops system concept. I also keep my budget planner to reduce my “Latte Factor“. It really works. You will see the result in a few months and then from there you can increase it time to time. I love it 🙂

  5. Great website and article on Personal Finance Planner – First Step Towards Financial Freedom. Many years ago I used the envelope system and it worked really good.
    Thank you for sharing. Can I share your website with some of my friends that need help with their budget?

    1. Hi Alyse, absolutely, please share with friends and anyone that needs some insights on finance. They are simple tips but if implemented can really make difference, as you well said, it works. Glad to inspire people in somehow. Thanks for that.

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