Credit Card and Finance Tips

Planning or personal financial planning is the process by which a person looks at your financial situation, set your financial goals, and formulates plans that will achieve these objectives.

Through the financial planning we better manage our personal finances, and improved our financial situation.
Let’s look at what are the steps involved in the process of personal financial planning:

1. Understanding financial

The first step in personal financial planning is to know our financial situation.

To do this, it is best to resort to the use of two tools: the personal income statement and balance staff.

In the personal income statement detail our income (wages, business, investment, etc..), Our expenses (food, education, services, etc..), And profit or loss (income minus expenses) that we obtained in a month six months or a year.

As detailed in our personal balance sheet assets (bank accounts, investments, real estate, etc..), Our liabilities or debts (credit cards, personal loans, mortgage, etc..), And our assets (assets minus liabilities).

2. Analyze financial

With the information we have collected through our personal income statement and balance our staff, we analyze our financial situation.

For example, in our personal income statement, we could see that we are not generating enough income (for example, do not have enough sources of income), or that we are spending unnecessarily on some items (for example, under “Recreation”) .

While our personal balance that we could observe few assets comprised of investment, or that we have too many liabilities as consumer debt (for which, in turn, are paying too much interest).

3. Setting financial goals

Based on our analysis of our financial situation, we now set our financial goals.

First we proceed to establish our overall goals (which will guide us to set specific targets), some examples:

increase revenue streams.
reduce monthly expenses.
acquire more investment.
reduce debt.

And then, based on our overall objectives, we establish our specific goals (which, among other things, we can measure our progress), some examples:

have a monthly income of 5 000 for the next year.
reduce monthly expenses by 30% next month.
invest in a business before year’s end.
cancel the entire debt for the second quarter.

4. Develop action plans

Once we have established our financial goals, the next step is to design plans that will enable us to achieve those objectives.

For example, to increase our revenues, we could establish as plans to request an increase of soil, look for new employment, increase sales of our business, invest in the stock market, and so on.

To reduce our expenses, we could establish such plans unsubscribe from journals not usually read, stop buying coffee or cigarettes, eating more often at home, etc..

To invest in a business before the end of the year, we could establish such plans to secure funding, make the necessary contacts, look for a partner, find a shop, etc..

To cancel our debts, we could establish as plans to cut our credit cards, consolidate all our debts, allocate a percentage of our revenues for the cancellation of debts, etc.

5. Develop personal budget

Once you’ve designed our action plans, the last step in the process of personal financial planning, is to develop a personal budget.

In our detailed personal budget money income (wages, business, investment, etc..) Cash expenditures (food, education, services, etc..), And the balance (revenue minus expenses) we expect to have in the coming months of the year based on our financial condition, and our action plans.

For example, if you previously had 3 000 expenses on food, and one of our plan involves eating more often at home, then our budget for the item “food” could be reduced to 2 000.

And finally, for better personal financial planning in addition to the personal budget, we could also develop a projected personal income statement, balance sheet and a projected staff, ie, an income statement and balance sheet as projects that would be for a date future.

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