We are all programmed to make snap decisions. Blame it on our biological constitution. These instantaneous decisions are most often not in our best interest. The hardest decisions are the ones that involve finances. Day in and day out, we unknowingly make financial decisions. They could be as minor as buying a new outfit or as major as applying for a marriage loan. Both large and small financial decisions you make have an impact on your future. The bad news is that you always don’t know how your decisions will affect in the long run. It’s only when you look back you can tell which choices were bad. But by then it’s too late. However, the good news is that with a little thought in your financial planning strategy you can be sure that your decisions are smart and will benefit you in the future. Here’s a look at the 7 best financial planning tips for a financially independent future.
1. Don’t buy what you don’t need
If you want to build up your savings, as a rule of thumb, don’t spend money on what you don’t need. Your goal may be to take a big family vacation. Keep a reminder, preferably a photo in your phone. Have a look at it every time you are tempted to buy something you can do without. Knowing what you are saving for keeps you motivated.
2. Consider debt consolidation loan to pay off your debt
Getting rid of debt is the best thing you can do for your finances. If you have multiple debts, you are losing a lot of money on interest. Apply for a personal loan. It’s a smart financial tool for a smart borrower. With a debt consolidation loan, you save a lot of money by paying off your debt faster and at a lower interest rate.
3. Set your account for automatic deductions
Most people get this wrong. Savings is not the money which is left in the account at the end of the month. Savings is the money that you should keep aside at the beginning of the month. The best way to save is to have a part of your salary automatically credited to a separate account which is not your transactional account. The money stays out of your reach; you can’t see it, you can’t use it. A classic out of sight, out of mind syndrome is at play here.
4. Set a budget and stick to it
Setting a budget and sticking to it is the best way to save money. Take out time to figure out your monthly expenses like food, housing, transportation, etc. Keep track of expenses to ensure that you stay within limits. Make sure you include fun in your budget. Set aside some funds to have dinner with friends or a small trip to the amusement park with family.
5. Don’t make hasty decisions
Don’t give in to pressure and make big financial decisions in a haste. Take your time, sleep on it, evaluate the repercussions, research for information, take advice from people you trust, and then make an informed decision.
6. Be healthy and happy
Be happy, eat healthily and sleep well. When you are happy, your body naturally responds better. A healthy mind makes the best decisions.
Every person thinks differently. A great financial decision for you could be a terrible mistake for another. So, which are the best financial decisions? They are the ones that work for you.