Personal Financial Planning Tips

Posted on December 7, 2011

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I know this blog is about Islam but this is something I had to post. I am an accounting & marketing major and I have a sweet spot in my heart for financial planning. Call me weird, but I love it, but then again I love excel and organizing accounts too lol. So, here are some tips that might help you with your own personal financial planning.

Stick to a Budget

One of my favorite subjects: budgeting. How can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars a year.

Pay Off Credit Card Debt

Credit card debt is the number one obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it’s so easy to forget that it’s real money we’re dealing with when we whip them out to pay for a purchase, large or small. Despite our good resolves to pay the balance off quickly, the reality is that we often don’t, and end up paying far more for things than we would have paid if we had used cash.

Contribute to a Retirement Plan

If your employer has a 401(k) plan and you don’t contribute to it, you’re walking away from one of the best deals out there. If you’re already contributing, try to increase your contribution. If your employer doesn’t offer a retirement plan, consider an IRA.

Have a Savings Plan

You’ve heard it before: Pay yourself first! If you wait until you’ve met all your other financial obligations before seeing what’s left over for saving, chances are you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.

Invest!

If you’re contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better.

Review Your Insurance Coverages

Too many people are talked into paying too much for life and disability insurance, whether it’s by adding these coverages to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents. On the other hand, it’s important that you have enough insurance to protect your dependents and your income in the case of death or disability.

Update Your Will

70% of Americans don’t have a will. If you have dependents, no matter how little or how much you own, you need a will. If your situation isn’t too complicated you can even do your own with software like WillMaker from Nolo Press. Protect your loved ones. Write a will.

Pay your bills online

If you don’t pay your bills electronically, now may be a good time to set up online banking. That way you can schedule your payments in advance, and even set up monthly bill payments for amounts that don’t change, like your mortgage, so you won’t be late.

Keep Good Records

If you don’t keep good records, you’re probably not claiming all your allowable income tax deductions and credits. Set up a system now and use it all year. It’s much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.

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