For anybody thinking seriously about building up their savings, it is essential to begin with a plan. Having a financial plan will not only help you better manage your money to set aside funds for savings, it will also give you guidance for what will be a long-term action plan.
Financial planning does not need to be too intimidating. By following these three simple steps, you can start off on your financial planning journey.
Start out by writing a list of your current monthly expenses in terms of housing costs, transportation costs, food, entertainment, clothing, education and all your essential spending. Then, deduct this from your income - this tells you how much you are able to save.
Once you have this, write down your life goals – what do you want to achieve? Are you saving for a car? Your wedding? Your children’s education? Or maybe you want to save for your retirement? Set a financial target for each one of just how much you will need to save to reach each goal.
Before you can think about how to save for the future, you need to first organize your income. Start by dividing your income into what you want to spend and what you want to save. A useful rule of thumb is the "50-30-20" formula, which breaks your budget down into three categories:
Once you have set your financial goals and organized your budget you need to make sure you are planning your savings. It helps to prioritise your savings according to needs. Depending on the amount you must save, these can be done one at a time or all at once.
Insurance is an essential part of your financial planning. Protect yourself and your family against the financial damage that can be brought about by unforeseen events and circumstances. As a minimum, you should consider life and health insurance options. Speak with a Chubb Life Financial Advisor who can recommend the right insurance solution for your needs.
With all these elements in place, you are set to begin your savings journey, safe in the knowledge that you have a plan in place to guide you. A financial plan does not need to take too long to create, but its value will stay with you for many years.