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A financial planner is well-versed in the budgeting of expenses, savings and investments. Budgeting is the process of planning and controlling your money by allotting or scheduling your income and expenses. Budgets play a vital role in helping individuals and organizations achieve their financial objectives. When you budget, you’re committing to a plan – outlining what income and expenses are expected over a specific time.
BUDGET YOURSELF WITH A FINANCIAL PLANNER
Creating a budget is the first step toward understanding where your money is going each month and taking control of your expenditures. To create a budget, you need to develop a list of all the money coming into the household and all the money going out. While creating the budget, it’s essential to be realistic about your income and spending habits.
MONITOR YOUR INCOME AND EXPENSES
It would help if you did this monthly to ensure that you’re sticking with the plan. However, it’s also important to note that there may be times when things don’t go according to plan. If this happens, don’t be too hard on yourself. Instead, a financial planner who will chalk out a solution.
DIFFERENTIATE BETWEEN YOUR ‘NEEDS’ AND ‘WANTS’
It’s helpful to think of your budget in terms of the difference between your needs and wants. Your ‘needs’ are items or activities that are essential for everyday living, such as food, housing, and clothing. These expenditures often consist of fixed monthly payments (e.g., rent, utilities). On the other hand, there are ‘wants,’ which are items or activities that aren’t essential but may be enjoyable (e.g., eating out).
RIGHT ALLOCATION OF MONEY
The third step to budgeting is allocating your money – dividing your income between needs and wants – to ensure that you can meet all of your payment obligations. How you allocate the money depends on how much income you have available, which expenses are fixed (i.e., must be paid regardless), and which are variable (i.e., can be paid if there is enough money left over). Once you clearly understand your income and expenses, it will be easier to determine how much money you have available.
TRACK YOUR SAVINGS WITH A FINANCIAL PLANNER
The final step to budgeting is setting and tracking a savings goal. Goal-based financial planners can help in achieving many things in life. Savings goals include things like buying a car, going on vacation, supplementing your retirement income, and paying for your children’s education. While you’re determining how much money you need to save each month for achieving these goals, it will be helpful to look at the big picture as well. The more you’re able to save, the better off you’ll be during retirement and other major purchases. So remember to set a savings goal and monitor your progress – this will help you maintain control of your finances.
Budgeting is an important tool that you can use to plan, monitor, and control your money. While it requires some discipline at first, budgeting can help you take charge of your financial situation. As long as there are no unexpected expenses or changes to your income, it’s possible to plan for the future. With the awareness of the general public regarding the need for investment, many certified financial planners are approachable to avail their service. CFP Shrikant Mukte is one such reliable and dynamic individual who has touched thousands of lives over the years to make them financially robust. Hence, give yourself the best option to convert your hard-earned money turn into gems!