Financial Planning for Ordinary Working People in 2021

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Do you know that to save money, you need to employ financial management? You will get nowhere on saving money, unless, you have the knowledge of managing your income and finances.

Financial management is one major umbrella division that oversees the success of an enterprise through designated officers with their own rank and file staff.

But for an ordinary working person, to save money, you have to learn simple ways of money management.

You will gain that knowledge in this post. So keep reading.

You need to integrate the term 'finance' into your daily lifestyle. So that whatever you do, it contributes to the standing of how much money you have.

It is in the sound management skills of the financial manager that the growth and success of a company are dependent.

You don't have to take all the responsibilities of a financial manager and apply it to your own personal financial growth.

Your future's financial security is greatly dependent on your collective skills in your own personal management style.

First, let's look at the definition of the term. Then see how it can help you big time secure your financially stable future.

What is financial management?

Financial management for ordinary working people boils down to giving so much importance to hard work.

In the context of personal finance, financial management is a systematic way of handling income and controlling all expenses be it petty daily necessities or big expenditures with the long-term goal of increasing the aggregate of money that goes untouched.

There must be an underlying purpose in personal management of one's finances, and that is to continually stretch fund allocations that go to financial instruments where the money both earns and secures one's future or an entire family.

That being said, you can manage your finances through little bits of money-saving efforts that you employ in any expenses, however small or big.

Continually minimizing both the short term and the long term expenses through the utilization of available tools is always given priority.

Why should ordinary people use financial management to save money?

When you manage your finance, you control every buck you spend, even to such extent of being stingy, because in the end, you win as far as saving money is concerned.

It is only with thorough and accurate management of income and finances that an ordinary working-class person would get to create the otherwise not present and unfamiliar sources of funds to save money

For a person like you and me before financial planning, our economic vocabulary only consists of four terms: income, expenses, debt, and budgeting.

As you manage your finance very well, vital elements prerequisite to future financial security begins to manifest themselves gradually until they are clearly visible.

There's a benefit in using the calculator often, which you develop once you manage your money. That is you tend to keep off things you spent money on previously but didn't give value to your money.

First, as you control your expenses outstandingly, you will have more savings. With an “organized record system” as your guide, you have the full understanding of how it happens.

You stick to your self-imposed discipline and your savings multiply. Then next to slowly appear is the loosening cash flow as your savings grow.

Now you improve your family's standard of living. While you continually manage your cash flow, and soon next big thing happens.

Left-over money comes your way, which eventually you call capital for any sound investment which will yield profit in the coming years.

See? When before your vocabulary for earnings is only “income” or “your salary” now you get to talk about “profit” — your profit.

Even at this early stage you begin to feel secure for the future because you know that your savings will be your source of the emergency fund.

The future is bright if you prepare for it financially.

Your cash flow will generate more capital to invest on your family security, and your existing investments promise high returns that when realized will enable you to acquire appreciating assets.

With financial management, your finance vocabulary has expanded from four to ten auspicious terms. Interestingly, you get to use the terms even without trying. You don't have a choice.

Because you know what? It would come naturally, all of those mentioned above. Doing it right, with 100% dedication, there's no way but up. You would grow with the full concept of each term because they are working on your financial growth.

Is personal financial management doable?

Embarking on an unaccustomed and seemingly tedious undertaking such as managing your income and finances and keeping it as part of one's lifestyle is “made so much easier today than before.”

In fact, if asked what's the #1 deciding factor that one engages in personal money management today, the answer would probably be “because of its easiness.”

It gives so much fulfillment for a frugal person that he saves even the lowest denominations.

The integral part that makes managing of finances intimidating to ordinary working people is “keeping record.”

Money tracking app makes keeping record easier

There's a bunch of money tracking apps you can download at either Google Play or Apple Store.

Through a smart device, “the tiresome job of keeping records” is now accomplished in minutes. Different reliable financial apps, like a money tracking app, are available.

These apps give power to you in order to you be able to prioritize daily tasks and do “records-keeping” on the fly. It is an entirely different experience which pushes the boundaries of keeping records.

Important points to remember in choosing a money tracker app

1. Password — you must have the ability to set your app a password and change the password or PIN anytime for your protection
2. Sychronisable — get a money app accessible in other smart devices through login information
3. Backup — always back up your data by downloading them or emailing them to yourself so that if needs arise you can print them up
4. Offline — use app that works even without wifi connection so that it goes hand in hand with time management
5. Ease of use — it must be user-friendly and straightforward with the expenses and incomes entries easy to add and find

How do I start financial management?

Embarking on the money-management for an ordinary individual needs a leap of faith as it is the start of a path filled with difficulties but a very rewarding finish line.

Assess your financial situation right now, realistically. How much is your monthly salary or if you are in a small business, how much do you make on your business? Do you have another source of an income? Add them up and get your total monthly earnings.

Now get the total amount of money coming out monthly, from groceries and rentals to transportation and of course including your debt payments whether in credit cards or installment plans, amortizations, educations, etc. Don't leave out anything.

Do you just break-even? Or your monthly expenses and liabilities exceed your monthly income? On the other hand, do you still have money left? Was it significant or just enough to get by in days?

Whichever way, you know you have to do something. Now you have the full knowledge of how your “inadequate cash flow” takes different directions.

In your new financial app, create different accounts for your monthly obligations or expenses according to categories, e.g., locked, obligated, unrestricted, etc.

Create accounts in your financial app

Managing your finance everywhere you are is the boon brought by money tracking apps.

• Locked — all payments that are locked or don't change monthly like amortization, pre-need plan, insurance, etc
• Obligated — all expenses dependent on usage like food, phone loads, credit cards, transportation, internet, utilities and many more
• Unrestricted — all expenses which are discretionary like entertainment, clothing, malling, fast-food, nightlife, lottery, out-of-town trip, etc

Account names above are only for presentation. You can name the accounts whatever fits you. Just be descriptive. You can create more accounts like if you send money to your parents monthly, it can be in a fourth account.

Add a budget for each account

The great thing about some money tracking apps is you can import your record to a lot of formats including email.

The budget for Locked must be the exact total of all the particulars under this category so that they are all paid. However, you can still lower the entire amount if you can get around by amending your payments' schedules to quarterly or bi-yearly. Inquire at each of the institutions to which you are making payments.

For the obligated

1. You must get the total of a previous month for all items under it.
2. If you can't recover the data, postpone the start of your money management.
3. Use the full 30 days of the oncoming month to get that total.
4. Once you have the total, lower that total amount considerably and assign that amount as your budget for Obligated Expenses.

For the unrestricted

The budget for unrestricted can be hacked quite easily to arrive in a significantly low budget for that category.

1. Set a low budget and limit your malling, limit your fast-food, cancel nightlife doing it only once a month if not at all.
2. If you're buying eggs in supermarket buy it in public market, conserve electricity, etc. They are all self-explanatory.

At the end of your first month, if you still spend more than your self-imposed budget, the chances are you still save because you decreased it too low from the previous month.

Nevertheless, you must stick to your budget. Otherwise, what's the purpose of your financial planning?

The first month on financial management to save money

The first day of any endeavor is always hard. But as you get used to it, it'll become smooth sailing.

Your first month is very crucial. You must start a new habit. It will not long before you get the hang of it, recording expenses on your smartphone.

Soon it's just like as casual as texting. Remember, you don't need much a calculator. Just enter each item and the cost.

In layman's term, the app automatically computes and displays running budget balance, total expenses, etc. So, in this area alone, you get to appreciate the quickness of keeping records through that modern technology in your hand.

Tip: Record expenses right away after each payment you make. Don't postpone as it will be the start of losing your focus.

Use your tight budget and little cash flow sparingly. The goal should be not to use up an entire budget. Frugal is the name of the game here. If you want to achieve to make significant money saved at the end of the month, change your buying habit.

Now if you have saved any amount though small by the first month, congratulate yourself, you can do it. And it's time to level it up. Keep it going. Read next.

How not to stop in financial management?

What we often see in people that remain exited on whatever they do is the added impulse to their personalities.

If we look closely, we'll see that they are “inspired.”

So the question should be, “how do I remain inspired about managing my income and finances at all times?”.

Ultimately, a set of impetus will make your lifelong dedication to this long-term financial preparations never waver no matter what.

To save money, you have to be inspired

Goals are important. You can't start plans without tying them up to short term and long term goals. Keep seeing your goals, on the other hand, is determined by being inspired, about reaching them.

How much do you save in your first month? Would it be satisfying if you double the amount saved at the end of your second month?

Do you have a threshold in which once reached you are going to use the money to make some profit? Have you tried imagining making money by budgeting and making a profit on a very small business that you can run on the side while working?

Or better yet, have you tried imagining yourself that while working at the work you came to love, you have created something working for you and giving you earnings?

You see those are a set of impetus — the bits of driving and motivating forces that keep you inspired and motivated.

They'll fan your ember of dreams into a burning flame of ambition. Think ahead. That's the only way to do it.

What would you be 3-years or 5-years from now religiously doing your financial planning? A lot of big things can happen.

That said, you can customize your own set of impetus, like seeing you alone or with your family in a well-deserved travel vacation abroad, or acquiring a new home.

Visualizing yourself living the dream you want to materialize is the ultimate way in the success of managing your finance pretty well.

Be creatively excited. Just be inspired to remain focused. The important thing is that you have the source to manage your personal financial planning. A lot of folks don't. And you are lucky for that.

Conclusion

Financial Management need not only exclusive to corporate and business operations. Without it, an ordinary working person would have unorganized different expense-and-income activities coming in and out uncontrolled.

With sound management and financial planning skills, ingrained in one's mind is the fact that the significant chunk of income is maximized and will produce financial security in the future through a great way to save money.

Do you have a way of managing your income right now? Which do you prefer — the old school of recording expenses or through a money tracker app? Let us know.

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Vernie Mallorca

Vernie Mallorca is an entrepreneur and blogger with years of experience in selling to institutional accounts. He gradually shifted to blogging when he found out that it is his calling to write timely and helpful articles online that can help others to save money, make money, and secure their future by handling their income smartly. In this blog, he shares both managing your finances, however small it is and valuable information on running a small business.