Having basic personal financial skills is one of the most important things you can do to live a healthy, happy, and secure life. Your level of understanding of the fundamentals of budgeting, saving, debt, and investing will impact every part of your life and can mean the difference between prosperity or poverty.

Finances are understandably one of the major causes of stress for adults. Everyone can relate to this stress; even the wealthiest people have felt financial pains at one time or another. Debt and/or a lack of savings can cause considerable hardship in a person’s life.

Why Set Financial Goals?

Financial goals help you to see your entire financial big picture more clearly. Setting goals allows you to feel like you’re in charge of your money. Goals help you to see what you want to do with your money and guide your financial decisions. When you set financial goals you also put into place the steps that will help you get there. 

Common financial goals including paying off debt, paying off student loans, building a retirement or college savings fund, or saving for something specific like a car, a wedding, or a dream vacation.

It’s important to choose goals that are specific and relevant and attainable and they should come with an expiration date. How else will you be able to evaluate if you are making progress if there isn’t a due date?

When you set financial goals you put into place a series of decisions that helps you evaluate how much money you make and how you can best distribute it. Small tweaks like putting a little more toward retirement and spending a little less on entertainment can make a big difference.

How to Build an Emergency Fund?

An emergency fund is a financial safety net for future mishaps and/or unexpected expenses. Emergency funds should typically have three to six months’ worth of expenses, although the pandemic has led some experts to suggest up to one year’s worth. Individuals should keep their emergency funds in accounts that are easily accessible and easily liquidated.

Starting early is the key to setting up an emergency fund because it helps you build up a comfortable cushion against unexpected emergencies later in life. Getting a start on emergency funds is relatively easy.

Set aside a comfortable amount from your salary each month. Calculate your living expenses for the desired period and make that your target for an emergency fund. You can then divert a portion of your paycheck—perhaps by setting up an automatic transfer—to the emergency funds account each month. Once the fund is built up, invest extra savings for the long term or other goals, such as the down payment on a mortgage.

“Save one third, live on one-third, and give away one-third.” – Angelina Jolie

What if you had a job loss, an accident, or a natural calamity? 

Imagine what you would do when none of them can help you financially? Hard times isn’t it. Emergency funds are for these exact scenarios

Emergency funds are the lifesavers in many many situations “Prevention is better than cure” you need to step ahead and think about all the possibilities in the future.

Emergency funds are the source that helps you to solve the financial crisis, this source of funds helps you to get through your hardest times and your unsecured loans

What is Retirement Planning?

Retirement planning should include determining time horizons, estimating expenses, calculating required after-tax returns, assessing risk tolerance, and doing estate planning. Start planning for retirement as soon as you can to take advantage of the power of compounding. Younger investors can take more risk with their investments, while investors closer to retirement should be more conservative. Retirement plans evolve through the years, which means portfolios should be rebalanced and estate plans updated as needed.

One of the most challenging aspects of creating a comprehensive retirement plan is striking a balance between realistic return expectations and a desired standard of living. The best solution is to focus on creating a flexible portfolio that can be updated regularly to reflect changing market conditions and retirement objectives. Inflation is a vital element to consider when planning your retirement. If you are unable to keep up with rising costs, you may have to compromise on your standard of living. Most experts say your retirement income should be about 80% of your pre-retirement salary.

How do you create a Budget?

If you want to have control over your spending and work toward your financial goals, you need a budget.The word “budget” is often associated with restricted spending, a budget does not have to be restrictive to be effective.

Creating a budget is to track where your money goes and a crucial step to getting your finances in order. A budget can make it easier for you to achieve financial milestones, such as building an emergency fund or paying off your mortgage, etc.

A budget is a plan for every penny you have. It’s not magic, but it represents more financial freedom and a life with much less stress.

Creating a budget is not that hard, to begin with, you can do it in an excel sheet.

Though making a budget may not sound like the most exciting activity it’s an important part of keeping your financial house in check. That’s because budgets rely on balance. If you spend less in one area, you can spend more in another, save that money for a large purpose, build an emergency fund, increase your savings, or invest. The result of your new budget will show you where your money is coming from, how much is there, and where it all goes.

Basic Steps to create a budget

1. Calculate your annual income 

2. List all your expenses

3. Mark the Fixed and Variable Expenses 

4. Determine the average monthly cost for each expense 

5. Revisit it so that you are in control.

Once you have set up a basic budget, customize it according to your financial situation and goals.

After you finish creating a budget plan, the next step is to stick to it. You can hold yourself accountable in many ways. For starters, you can set reminders with your credit card due and bank accounts when you reach a preset spending amount. You should also try tracking all of your expenses into your spreadsheet or budgeting app right after you make a purchase.

How do you Spend Smart?

Smart Spending is spending your money wisely. It’s all about reducing unnecessary expenses and making good decisions in buying.It sums up in one principle “Know your needs and wants”.

Keep track of your spending helps in identifying all the unwanted expenses and it makes you reach for a better/cheaper alternative once you visually see how much you are spending.Pay attention to all your subscriptions you can narrow it down on what you’ve been wasting money on.Saving for the future is also a smart way of spending your money.

What are Long term Investments?

Long-term investments are investments that offer higher returns after several years. Investing is a long game to play. Whether you want to invest for retirement or grow your savings, it’s best when you put money to work in markets and set it and forget it.The most common long-term investments are Growth stocks, Stock funds, Dividend Stocks.Fixed-income and market-linked investments have a role to play in the process of wealth creation. Fixed income investments help in preserving the accumulated wealth to meet the required goal. 

Essentials invest in long-term 

1. Research before you invest

2. Always have a diversified portfolio.

3. Formulate a strategy and stick to it 

4. Be a Contrarian Investor 

5. Always look at the bigger picture.