Financial stability and independence is a goal that may seem unattainable, however with the right steps, it can definitely be achieved. All you need is a little bit of financial planning to ensure that you are not buried under a pile of debt, and actually have a steady stream of income, even after you retire. Using the following tips, you can start planning your finances properly.

1- Track Expenses

The first step to figuring out what your financial situation currently entails is tracking your expenses. Often, people cannot seem to determine what makes them end up penniless when nearing the end of the month. Keeping track of your expenses will help you figure out what you are spending your money on, and whether it is a necessary expense or not. Tracking what you spend your money on will give you an idea about what expenses need to be cut out from your budget, and what costs you cannot ignore.

2- Create a Budget

After you find out where your income goes, you need to start creating a budget. Without a clear budget, you will rarely find yourself with a little bit of extra money or even any savings to speak of. There are different ways to budget but one successful way is to split your income into thirds. The first third is to pay off bills and debts, the second is for personal use, and the third should be put aside as savings. This is a great way to start your budgeting. When you are comfortable with this system you can start adjusting it and setting a specified budget that has details about where every single penny is headed.

3- Start Investing

Investing can seem like an intimidating concept, however, it is quite easy and can bring you a lot of benefits if done correctly. If you are hesitant about taking this step, you can seek out advice from professional financial advisors to help you set a clear plan. You just need to remember that location is important when searching. For example, if you are living in Philadelphia, PA, you shouldn’t be looking for financial advisors in a different state. Simply searching for Financial Planning in Philadelphia, PA, or using similar wording can help you find great financial advice near you. Finding professional help, nowadays, has never been easier. Investment plans differ depending on how much risk you are willing to take, and what kind of investment budget you are working with.

4- Pay Back Debts

Debts, including loan payments, utility bills, and regular expenses such as rent or mortgage payments are crucial to pay off as soon as possible. Leaving your debts to pile up or not paying them on time will directly affect your credit score. It will also make it harder to reach financial stability or start thinking of investing for a better future. Setting up a debt payment plan can help you figure out how you can pay off any debts and bills you have without any delays.

Using these four essential tips, you will be able to easily set up and maintain your finances. It may take some time to track all your expenses and find out which ones you need to cut back on. However, in the end, it will be worth the effort when you start seeing a definite increase in savings and you don’t find yourself living paycheck to paycheck. 

Published on Holr Magazine