Weekly Reflections #16 : Financial Planning

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Do you think Financial Planning is important and why?

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INTRODUCTION:

Financial: in simple terms, financial means anything that is related to money and how the money is been managed and spent.

Planning: it's the fundamental function of management, and it involves establishing policies, goals and procedures on what to do, when to do it and how to do it effectively.

Financial planning: can be seen as the process of creating a strategic plan for your finances so as to achieve your short and long term financial goals. And it also reduces the risk of over spending or using your resources.

Financial planning therefore is important because,

1. It helps you to achieve your set financial goals more effective and efficient and it also helps you to handle unforseen situations like illness, loss of job etc better.

2. It serves as guide to helping you know the best investment to go into fitting your needs and goals.

3. It also helps you to control your income and expenditures making savings more easier and achievement of goals becomes effective.

4. And lastly, financial planning enables individuals to prioritize the most vital goals in their life and how to plan strategically on how to achieve those goals.

How do you track your expenses and savings?

Expenses and savings are two different financial terms and the have different meaning. Therefore how to track them also differs.

How to Keep track of expenses;

1. The first step in tracking expenses is Creation of budget, this includes listing out all your income, follow by your expenses.

2. The next step is ensuring that you keep proper records of all your income.

3. Keep proper records of all the money you spend, i.e ensuring that you record all expenses no matter how little the amount might be.

4. And lastly, you then move ahead to deducting or minusing your expenses from your income. Once your expenses is deducted from the income. Your expenses becomes tracked.

How to keep track of savings:

1. We have different kinds of accounts which serves different purpose. Therefore the first step to tracking savings is to open a savings account.

2. The second step is to formulate a strategic saving goal.

3. Setting up of standing order for the savings account, this will help you to manage over spending habit.

4. Lastly, open a separate account for spending, i.e the savings account shouldn't be used rather it should serve it purpose which is keeping track of savings.

What are some common financial mistakes to avoid?

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There are a lot of financial mistakes we need to avoid, some of these mistakes are;

1. The first and most important financial mistake we need to avoid is making our expenditures greater than our savings.

2. Another mistake we need to avoid is spending our money or financial resources unnecessarily, especially on none essential goods.

3. Making use of all our available financial resources without saving is another big financial mistake we need to avoid. We all need to save in order to be able to handle any financial crisis that might arise.

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