A financial plan is like an exam, you have to prepare for it carefully before you can execute it. If you are weak at it, it can lead to a financial crisis and a disturbed everyday life. Whereas if you are good at it, you can plan things that any other person standing at the same level as yours financially, cannot even think of. A rock solid finance plan is the base of a happy family.
Your Personal Financial Mentor blog brings you certain key points to be remembered for a rock solid financial plan-
- Stick to a budget.
Most people plan a rock solid finance budgetbut never follow it wholeheartedly. If you want to save more, you must stick to the plan. It is ideally acceptable to spend about 65% to 70% of your earnings
- Have an emergency fund.
The most important part of a financial plan is the existence of an emergency budget. You can invest that amount in liquid assets. It will help you in case of financial crisis or if you lose your job.
- Invest your savings in low-risk assets.
It’s good that you save but it’s better if you invest these funds in low-risk funds. You can also invest them in retirement plans so as to secure your future.
- Limit your debts.
Once you take a debt, you enter a vicious cycle that is difficult to exit. Unless the asset that is being purchased is a source of income, you should refrain from taking a debt.
- Inculcate a habit of saving at an early age.
It is a known fact that if you compound something it will grow more than normally multiplying it. With savings, it’s the same. If you compound it, your wealth can increase manifold times. So start saving at an early age.