#TheFinancialWellnessSeries

A solid financial plan can be your guiding light to prudent spending, intelligent saving and sound investment. Luckily, a customised plan to your needs doesn’t have to be a monumental task. With the following five steps, you can create a personalized plan that reflects your earnings, growth potential and long-term goals.

Step 1. Budget Your Cash Flows

Most of us don’t consciously make a note of our expenses every time we take a trip to the grocery store or grab a snack at the local eatery. A fluid approach to expense management can lead to cracks in your cash flows, with expenses unwittingly slipping into undocumented oblivion. Remind yourself to jot down expenses the next time you pay by credit card or cash. For a more systematic approach, install an expense management app on your phone. Reconcile your expenses at the end of each month and track your total monthly to see where you are spending the most. During this time, focus on identifying, rather than correcting, big-ticket spends. By continuing this activity over three or four months, you will gain insights into spends are avoidable.

Step 2. Set Financial Milestones

Set quantifiable goals for ten, twenty years into the future. Perhaps you harbour a dream of owning a vacation home or building an enviable financial portfolio. Whatever your goal is, make sure it is realistic, so you’re motivated to achieve it. Apart from establishing financial milestones, it is important to shield yourself against the future with insurance. Life insurance can offer you and your loved one’s priceless coverage against unforeseen emergencies. Also, consider other forms of insurance – health, auto, and real estate – to cover your family and avoid future financial burdens.

Step 3. Watch Your Debt

A healthy amount of debt is good for your balance sheet, but as the saying goes too much of anything is bad. Limit your liabilities to allow yourself to earn, save and spend optimally. Also, speaking of debt, make sure you keep a watch on your credit score. Inaccurate credit reports can impact your long-term eligibility for loans and other instruments.

Step 4. Embrace Saving & Investing

Saving and investing are two sides of the coin. The art of saving lies in curtailing your expenses to minimize frivolous spends. This circles back to Step 1 in this article – of budgeting cash flows. By identifying useless spends, you can start controlling them over time. But hey, everybody needs to indulge now and then, so don’t get too hung up on eliminating these completely. When you’ve begun a savings cycle, and have put enough money aside for emergencies, think about putting a little extra into investments. Whether you’re a seasoned investor or a novice, mutual funds are an excellent gateway to a healthy portfolio. Not only do they come in a spectrum of risk variants, but they also provide professionally managed investment avenues – saving you from doing the spade work.

Step 5. Plan Liquidation Strategies

Every financial milestone in your plan must have a corresponding portfolio liquidation strategy. If you’re dreaming of investing in a vacation home a decade from now or expect to need money for your children’s education, you must consider which part of your portfolio your funds will come from.

Planning your way to financial wellness can be the best gift you give your future self. Get a head start by taking the lead today.

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