It’s wise to consult an expert adviser before making crucial financial decisions. Still, with a basic knowledge and common sense, people can easily create annual plans and run their personal finances effectively. Thorough financial planning helps people to save money and generate the best dividends from their savings. Fortunately, today internet is the best source for learning financial basics. So, before making their first plan, people need to focus on the following financial terms:


  • Financial planning;

  • Insurance;

  • Investments;

  • Taxes;

  • Loans;

  • Retirement funds;

  • Real estate;


Anybody who uses the internet for learning knows that sometimes it’s very hard to find a reliable source. So, before the learning process starts people need to validate their sources and make sure they are using the top authority websites, blogs and podcasts, run by financial experts with a proven track record. After learning the financial basics, planning will be much easier.


Goal setting

Every plan requires a clear set of goals. Financial goals need to beSMART. Planners should be able to easily track their accomplishment, with the help of a simple Excel worksheet. Goal setting should define both long- and short-term goals. Long-term goals focus on the bigger picture, and they define crucial things like retirement funds, mortgage or kid’s college funds. Short-term goals focus on everyday expenses and smart budgeting. Defining realistic and scalable short-term goals will help planners to save more money and speed up their long-term goals completion.

Monthly budgeting

Monthly budget is the centerpiece of a financial plan. It provides a clear picture of planners’ expenses and tells them how to generate more savings. Budgeting is easy. It requires planners to subtract their expenses from their monthly income. Both income and expenses should be divided into several categories, like:


  • Housing (mortgage, home repairs, etc.);

  • Utilities (gas, electricity, cable, etc.);

  • Food (groceries, dining, etc.);

  • Education (kids’ college tuition, textbooks, college or high school pocket money, etc.);

Calculating loans is also a very important part of the budgeting process. People should take loans only when they are sure that the product or service they are going to buy will save their money in the long run. For example, sometimes is more beneficial to take a mortgage or a car loan than to pay rents or public transport for several years. Today, there’s a wide variety of different loans on offer. Even clients with an imperfect track record can get a financial stimulance from specialized companies such as Bad Credit Loans.

Generating savings

Saving money is the most important goal in every financial plan. A good financial planner will find a loophole in every expense category. It’s very important to create a difference between wants and needs within the monthly budget. Managing wants and needs and finding sustainable solutions for everyday living is the best way to cut costs, increase savings and accomplish the long-term goals. Here’s the graphic example. Many people who want a 100GB mobile data plans can easily function with 50 or even 20GB plans. They just need to make use of Wi-Fi wherever it’s available. By cutting their data plans, they can save from $20 to $100 on a monthly basis.


Smart budgeting and savings generation should become a habit. Most financial experts recommend the method, called “Paying yourself first”. This means that people should set a part of their monthly income aside, the moment after they receive their salary.

Emergency fund

An emergency fund is a very important part of every financial plan. It should cover the planner’s expenses for at least three months, in the case of emergencies, like job loss, illnesses, accidents, etc. An emergency fund should be stored in an insured bank account. This way it’s easily available, and it can generate a small interest over time.

People should also make use of every savings incentive offered by their employer or the government. Receiving government or employer’s contributions and benefits (on 401(k) plans for example) is like getting free money.

Investing money

Investments are an essential part of every financial plan. This process can generate very high returns and help planners to achieve their goals quicker. Of course, everybody should know that investments carry a certain degree of risk. That’s why they should choose more secure investment opportunities.


For example, instead of investing money in individual stocks, investors can support index funds. These are mutual funds, with portfolios that track components of market indexes. Index funds are ideal for employed investors, who can’t spend their day calculating possible outcomes. By investing money in index funds, people are buying stocks that are both below and above the average. Although this way investors miss some promising stocks, they also avoid highly volatile deals and protect their assets during the bear market.


Personal finances are sometimes as complicated as the business ones. Still, thorough financial planning and realistic budgeting and cost cutting help people to save more money and to provide for their family and themselves.