Weekly Reflections #16 : Financial Planning

Hello friends

The financial life of every individual is directly proportional to their financial plans

Do you think Financial Planning is important and why?

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Oh yes I think financial planing is very important. Generally, It is said that a person without plans is someone that is already on the path to fail in life.

Anyone who has a desire to rise up and do well in their finances must be someone who is willing to make financial plans. What then is financial plans? Financial plans are the steps taken to ensure the inflow of money and it's sustainability.

For everyone who has ever made the right financial plans always remains at the top financially. Financial plans teaches us how to spend money wisely, what to do with money, and how to get money.

It is also important to have financial plans because without it, there will be no direction in our finances such as excess expenditure, extravagant lifestyle and even poor money management.

How do you track your expenses and savings?

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My expenses and savings are tracked by me through budgeting and scale of preference . Before I spend the money that comes to me, I write down the things I want according to how much I need them. This is called scale of preference.

On that list, I write down the things pressing to me and I ask my self how much I need them, if I find out I am only buying them not because they will be useful to me, I strike them out.

Another principle that has helped me in tracking my expenses and savings is the principle of not buying at impulse. I plan what I want to buy this makes me avoid impulse spending. This is also called budgeting for me. So whatever I didn't budget for is not really for me.

What are some common financial mistakes to avoid?

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There are many financial mistake we make today and they include:

• Spending money on liabilities rather than on assets. Assets are things that can produce back the money invested or used to buy it. While liabilities are things that do not have capacity to produce back the money used to buy it rather it takes more money from us.

• Spending all your earnings without leaving a portion for savings.

• Borrowing some money just to spend it on a liabilities.

• Spending at impulse.

• Saving money to finally spend it again on frivolities instead of investing it.

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