Financial Planning
5 Steps to Make Managing Your Finances Easier
It would be nice if you could have one magic formula or one easy trick that made it so you never had to worry about money again. If you are tired of being stressed out about money all of the time, you need to get a hold on your personal finances. There are five keys that can help you get control of your finances. Once you have started following these five steps consistently the stress about your finances should diminish.

This is because you have a clear plan that you are following.

Start with Goals

The first thing you should do is to write specific goals about what you want to do with your life and your money. Finances can affect many different areas of your life. Your goal to travel the world affects how you will plan your finances. Your goal to retire early is dependent on how well you handle your finances now. Home ownership, starting a family, moving or changing careers will all be affected by how you manage your finances. Once you have written down your goals you will need to prioritize them. This makes sure you are paying attention to the ones that are most important to you. You can also list them in the order you want to achieve them, but for a long-term goal like retirement, you should be working towards it while working on your other goals.

  • Start by setting long-term goals like getting out of debt, buying a home, or retiring early. These goals can help you focus your shorter term goals.
  • Prioritize your goals to help you create your plan (which is the next step).
  • Set short-term goals, like following a budget, decreasing your spending, or stop using your credit cards.

Create a Plan

A plan will help you reach your goals. The plan should have multiple steps. The first part of your plan should be to get control of your budget.

You will need to create a spending plan. The second part of your plan should be to get out of debt. After you have accomplished those two things, you should decide what you want to do with your money to reach your goals. The money you free up from your debt payments can be used to reaching your goals. At this point, you should decide what priorities are the most important to you right now, as long as you are steadily working towards your long-term retirement goals, you can begin to focus on the most important goals you have set for yourself. Your goals, along with an emergency fund, will help you stop making financial decisions based on fear and help you get control of your situation.

  • Your budget is key to success. It is the tool that will give you the most control of your financial future. Your budget can help you reach the rest of your plan.
  • Use budgeting software or past expenses to get you a starting point for your budget.
  • Take the time to focus on your budget now. If you need help, consider taking a personal finance class.

Stick to Your Budget

personal-financeYour budget is one of the biggest tools that will help you succeed financially. It allows you to create a spending plan so you can focus your money in a way that will help you to reach your goals. Even after you are out of debt you need to have a budget. It is easy to spend more than you make, and if you stop tracking your spending you can go over and run up debt really quickly. A budget lets you decide how to spend your money. Without the plan, you may spend your money on things that are not important to you, but you want in the moment, and then wonder why you are never reaching the financial milestones you want to set. If you are married you and your spouse need to work together on the budget. This will help you to achieve your goals together and prevent fights.

  • Consider switching to an  envelope budgeting system that uses cash for the difficult categories.
  • Also budgeting software with mobile apps so you can enter spending when you are actually shopping can help you stick to your budget.
  • Planning ahead can also help you to avoid overspending, which is why budgeting is key to being financially successful.

Get Out of Debt

Your debt is a huge obstacle to reaching your financial goals. Set up a debt elimination plan that will snowball your payments. While making minimum payments, you focus extra money on one debt at a time and then move all the money you were paying on the first debt to the next debt. Once you are out of debt, you need to make a commitment to stay out of debt. Stop carrying your credit cards around with you, and save up an emergency fund to cover unexpected expenses so you do not need to turn to a credit card to cover them.

  • You may want to sell items to find extra money to kickstart your debt payment plan.
  • A second job can help speed up this process and may be necessary if you want to make lasting changes to your situation.
  • Look for areas you can cut in your budget to increase your debt payments too.

Don’t Be Afraid to Ask for Advice

Once you are ready to grow your wealth and begin investing you should speak to a financial planner to help you make your investment decisions. A good advisor will share the risks involved in each investment, and help you find products that match your comfort level while helping you work towards your goals as quickly as possible. A financial planner can also help you with your budget if you want him to. These types of planners charge an hourly fee, and will help you set up a basic budget if you need the help, and then help you choose investment products when you are ready. Remember that investing is a long-term strategy to building wealth. Check out these personal finance tips too.

  • A local church or community center may be offering classes on personal finances and budgeting. Occasionally banks and credit unions may do this too.
  • You can also find a mentor that would be willing to walk you through your budget the first few months. This can help you if you are overwhelmed with your budget. A mentor can also help with other financial areas like opening a business or something similar.

Weekly Market Outlook

Faster U.K. inflation is putting the Bank of England on track for a rate hike. Eventually.

That’s according to the latest Bloomberg News survey of economists, which has 65 percent forecasting that the next move in the benchmark interest rate is more likely to be an increase rather than a cut. But any such move may be some time away, with the median forecast in a separate poll showing no rate change until 2019.

BOE policy makers are facing a sharp pickup in consumer-price growth because of the pound’s drop since the Brexit vote, with data next week forecast to show an acceleration to 1.4 percent, the strongest since 2014. That’s just one concern for Governor Mark Carney, who will deliver his first speech of the year on Monday evening, and is keeping a neutral bias on rates as he monitors the potential economic fallout from the decision to quit the European Union.

“Inflation is going to move up quite markedly as we get towards the middle of the year,” Victoria Clarke, an economist at Investec Securities Plc in London, said in a telephone interview. “So for us, certainly not this year or next but down the line, the next move is up rather than down.”

As the pound’s depreciation and higher oil costs feed through to U.K. shops, the BOE expects inflation to breach its 2 percent goal within months. That may make life uncomfortable for policy makers, who are trying to balance the trade-off between supporting the economy and making sure price expectations don’t become dislodged.

The inflation data on Tuesday will come hours after Carney speaks on the BOE’s future policy challenges on Monday evening in London. The governor may give his latest thinking on the outlook after the U.K. economy surprised many with a stronger-than-expected performance since the Brexit vote.

Forecast Upgrade

Carney signaled this week that the BOE could raise its economic forecasts for the second time since the June referendum when it publishes its next policy decision early next month.

While sterling and oil are pushing prices up, the pressure may ease if Brexit uncertainty undermines demand and hiring. BOE officials have said that they will tolerate some overshoot of inflation this year to protect jobs and growth, but there are limits to that. Policy maker Michael Saunders said Friday that changes in labor-market structures mean that the U.K. can probably run a lower unemployment rate without fueling too-fast inflation.

“There will possibly be a small shift in tone, but he will not want to pre-empt the February Inflation Report, which isn’t that far away,” Investec’s Clarke said of Carney’s upcoming speech. “He needs to be reflecting what we’ve seen in the economic data, which has been reasonably positive against earlier expectations, but also cautious, because there is a long road ahead for the U.K. now.”

Like economists, traders also put a higher chance on a rate hike. They are pricing in a 31 percent probability of an increase by the end of 2017, against zero chance of a loosening.

Kallum Pickering, an economist at Berenberg Bank in London, said that while no rate change is the most likely outcome for some time, any change at the BOE leans toward tightening.

If growth and inflation exceed expectations, “the BOE could begin to tilt from its current neutral stance to a more hawkish one,” he said. “A first rate hike in late 2017 could be one of the surprises of the year.”