Personal Financial Planning
Financial planning on a personal level is taking a no-nonsense look at your income sources and money outflows on a monthly basis. The whole point of this exercise is not to frighten you into looking at your finances in an honest-to-goodness way but merely to give you a rough idea on how you are managing your finances. You yourself might be surprised to find out all those so-called “money leaks” that add up to several dollars per month.
Think of your Finance
The first step is to list down all your income sources (sideline business or any additional part-time work, bonuses, holiday pay, premium pay, etc.) and consider them as regular income but try to estimate them only in a way conservatively. In a word, do not overestimate your income sources. Try the reverse for your monthly expenses. Try not to underestimate them and also include some contingencies, expenses or money outflows you do not expect in the normal course of things. The intent is to provide you with a financial buffer that you can use in emergencies and not to resort to borrowings. A little savings can go a long way, they say. Having a monthly budget helps to plan in a relevant time frame that is short enough to be flexible but in a way also long enough to make you see the results of your planning. But you need to set realistic goals for yourself. A monthly budget should be of help.
Sources:
- http://pfp.aicpa.org
- http://ocw.uci.edu/courses/AR0102092
- http://financialplan.about.com/cs/budgeting/a/Budgeting.htm
- http://www.mywealthguide.com