Thursday, 1 September 2016

8 points that define your personal finance goals

We present eight ways in which you can create a sound financial plan for yourself and your loved ones.

Life has a way of throwing unexpected twists and turns in your path. But instead of fretting over the future, it helps to be financially prepared for life’s unpredictability. Consider the following ways to plan your financial future:

1 Set goals and act on them wisely. No dream is ever accomplished without a goal, and the same is true of personal finance as well. If you want to have an extra Dh 10,000 every year, you must proactively save money every month and follow that plan diligently. Create a financial roadmap for the year that includes all the major financial milestones you wish to achieve and act on it.

2 Explore your bank’s personal finance products. Your bank has many useful personal finance products for your use. Your personal banker may also advise you of new products and services from time to time. Sign up for products that help you further your financial aims. 

3 Save to invest. Merely saving money is not enough – it must be invested in the right instruments to create wealth for the future. Visit your bank to get more information about the best investment avenues for your age, risk appetite, income and lifestyle. Creating the right investments helps augment your money for the future.

4 Spend within your means. This is an important habit that every person must inculcate: spend only what you have. This applies especially to credit card spending, in which people tend to spend beyond their means. Use debit cards instead of credit cards, and set a spending limit for yourself every month.

5 Settle all bills within due date. Not only does settling bills on time give you brownie points with your utility service providers, it also gives you a good credit score. Be sure to settle all payments on time so that your finances remain in check and you do not need to pay late payment penalties. Settling credit card bills on time is most important.

6 Buy insurance for the future. Taking an insurance policy that covers you and your loved ones is an important personal finance decision. Not only does it provide life coverage, it also ensures your family’s financial safety in case you are absent from their lives.

7 Insist on the family following good financial practices. Not just you, your partner and children must also be careful about spending money. Discourage all wasteful spending habits and teach your children how to save money. Children are quick to emulate their parents, so it is never too soon to impart lessons in personal finance.

8 Plan your retirement. This is a crucial step in your financial journey. While you pay for your family’s dreams and make sure each of your loved ones is well cared for, you must also ensure that you have a comfortable sum of money laid away for your retirement years. Your retirement planning must include having a home for yourself and your partner, as well as monies from investment and pension plans to take care of your expenses.