Future Wealth Through Managing Personal Finance

Future Wealth Through Managing Personal Finance

Individuals and family units make everyday decisions on how they handle money. What amount is spent, how much is saved and investment strategies are all part of creating wealth and managing personal finance. Planning for the future is a necessity rather than a luxury.

To be able to save with the idea of investing, it is necessary to know ones income and liabilities. In other words, knowing the income and exactly how the money is being spent is essential to putting to place a budget and savings plan. The budget does not have to be detailed but with sufficient information to be able to assess the spending habits. An Excel Spreadsheet with three columns headed income, expenditure and balance funds will suffice.

When the budget shows that the balance remaining is in the negative or a very mall amount, a review of the spending pattern can be undertaken. If it is obvious that it is not possible to cut down on the normal outgoings to increase the savings column, thought should be given to getting another income. A part time or casual job can help with getting the extra funds towards savings.

The next step is to set a savings goal and create a plan of action to achieve that goal. The goal should be realistic and achievable. If a pie in the sky goal is set, it can be very demoralizing when it becomes obvious that the goal is not attainable. Of course the goal can be changed up or down as time goes on, depending on how well the plan is progressing. Writing down the goal and the action plan will help to monitor the progress.

Savings accumulated by hard work should be made to grow by responsible investing. Initially the easy methods would be an interest bearing savings account or fixed deposit account or a managed fund. The type of investment chosen will depend on the money available to deposit and the requirements of the family.

More sophisticated ways are the purchase of stocks and shares or other appreciating assets such as gold or art works. These forms of increasing savings should not be undertaken without the necessary knowledge. It is not possible to be masters of everything. Therefore, if you are adventurous and wish to try the more advanced investment strategies, then make sure that you first invest in learning and training.

One of the major investment strategies is of course purchasing property. This is a long term wealth creation strategy and should be included in any investment portfolio. The main advantage of investing in property is the fact that it improves cash flow by giving rental returns and also has tax advantages with negative gearing.

Whatever investment plan is put into place, it requires discipline and perseverance to achieve a level of success. In any event future wealth through managing personal finance can become a reality if the correct savings and investment plans are formulated. Since it is an acknowledged fact that people cannot live comfortably on a pension alone, wealth creation is something everyone should give some thought to.

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