Do you feel spooked just thinking of all the financial costs you have waiting on you? Once you embark on the journey to mapping out your personal finances, it can look like a juggernaut. You want to monitor a spread of assorted areas of all your earnings. Luckily, there are a variety of personal finance planning tools out there that take the sting out of this process.
They can facilitate your plan for what’s turning out within the next few months and also the future far away. These nifty apps also manage your money more efficiently and effectively than most of us probably do ourselves!
This article will provide you with insight into why planning is so important, how a planning tool can help with the herculean task and some great reasons why you should start planning sooner rather than later!
What is Personal Finance Planning?
The phenomenon of managing finances for the individual involves goal setting, chalking out a path to reach those goals, and then actively pursuing those targets to succeed in your pre-set goals.
It involves identifying the future-related financial aims, like buying yourself a dream house or even taking early retirement and then stressing the old grey cells as you work out how to get there.
You’ll also have to identify the current targets (i.e., short-term and even medium-term) that are vital within the here and now, like paying down debt or saving money for any surprise life may spring on you.
You’d probably like to be able to have sufficient funds within the bank to afford to pay off right away any bills, routine or one-off, that come your way and still retain spare cash when an unexpected liability pops up. It’s about getting a handle on what the current situation entails, and so ensuring that looking back you won’t regret anything.
Is financial planning for your life really important?
As you buckle up to plan for the longer term, what you’re doing is making certain that you have adequate resources to capitalize on life and gain the satisfaction of getting what you always dreamed of.
With the assistance of individual financial planning, you’ll determine what proportion of funds need to be kept aside, what can be spent away, and what you should invest for rainy days.
And with the passage of time, as you get more familiar with the process, you’ll also determine what quantity of debt is simply too much for you and what reasonable interest rates ought to be charged on any loan you consider taking out.
You may think that being prepared for your future means buying a car or house, but it really means far beyond that. It is gaining the ability to discharge all due bills as they pop up and not having debt hanging over you.
It means having enough currency in the old checking account so you never should worry about overdraft fees or late fees when paying off debt.
It means having enough money put aside monthly so that if any uncertain situation arises, you have got the resources available to cope with it straight away without having to redirect savings or getting entangled with credit card debt.
Deliberating on your financial future means developing action plans for your aims. In addition to this, it also helps you spend less money than you have the capacity to bring in.
A great long-run benefit is the help you get in keeping track of your spending habits so you do not overspend or miss out on opportunities to have your cash work for you.
It is also important because it helps you avoid debt by ensuring that every one of your expenses is covered (including housing and insurance) before moving forward with any new purchases.
Why does one need personal finance planning tools?
Planning the financial roadmap of your life isn’t just about knowing the basics. It’s about understanding how your finances relate to the other aspects of life, in order that you’ll integrate them into a cohesive whole.
A personal finance planning tool is great to accomplish this by providing a picture of your economic position, including what’s in the bank and investment buckets in a single platform. They’ll also allow you to determine what quantity of money is pouring in monthly and what bills must be paid, so you’ll determine where your income should go.
The reason for this can be simple: having good financial tools can facilitate you to make better decisions that may fast-track your target achievement and avoid unnecessary risks.
In today’s world, it’s hard to form sound decisions without the correct set of private finance planning tools. People today are busy with so much on their plate that e, they do not have enough time to whisk through documents and browse books on the way to manage their finances.
For instance, if you wish to avoid wasting money on your insurance, then you would like some personal finance planning tool that may facilitate the calculation of your premiums and compare different companies so as to leverage the deal that has the best value for money possible.
How Can a Planning Tool Aid with Budgeting?
Having a budget, or a forecast of upcoming expenses, can help in keeping track of your expenses and realizing the inflows you have coming your way. This works by facilitating you to determine what proportion to spend on certain things, including housing, food, bills, insurance, etc.
A budget, quite like the white lines on the side of the road, helps you remain on track in relation to your finances and implement course correction if you have been too lavish with your spending.
A personal finance planning tool is intended to assist in developing a budget, which helps you retain a trail of all outflows and ensure that they do not exceed your income.
An honest finance strategy for yourself will brief you on where your money goes every 30 days and what it leaves behind for savings and future planning when the month is done. It’ll also lay out the quantity of green paper incoming and outgoing, enabling you to form better decisions about how to spend that money.
In addition to that, these tools also provide an outline of where you stand in terms of money so you recognize where you’re falling short before deciding what to attempt doing next.
If there are any expenses that appear out of place (like paying off an additional Mastercard bill or those dreadful student loans), these should be looked into first so they do not become scarier than they already are, down the road!
Finance planning tools for you
To provide you with a guiding light, we’ve managed to enlist a number of personal finance planning tools on the market:
- Mint
An easy-to-use tool that helps you track your finances and plan for future expenses. It’s accessible on computers, smartphones, and iPad platforms through applications. You’ll be able to also find recurring transactions with Mint so that they happen automatically without you having to give some thought to it!
Mint also features a range of tools for comparing financial products from different companies so as to seek out the ideal one for you. You’ll use Mint’s “Compare Credit Cards” tool to work out how your Mastercard options compare with the others and see which cards offer lower interest rates or better rewards opportunities.
Mint comes packed with a range of advanced features like automatic investment tracking and tax reporting in order that you do not need to consider it, it just happens! Mint also offers some free services (like budgeting) but these are limited in scope compared to what you get with paid plans.
- Quicken
This dream of an app allows you to line goals and break them down into monthly or weekly amounts. To avoid bothering about it personally, you’ll also enable automatic payments from one account to another one.
Quicken will facilitate you to easily trace your investments and plan for retirement by providing a much simple user-friendly dashboard where you can easily view the details of all the accounts that you have in the same place.
You’ll find alerts that will permit you to recognize when and how certain thresholds are met or if there are any alterations in the balance of your account.
- TurboTax
As one of the apps truly among the popular players in the category of personal finance planning tools, it is a self-help tax preparation tool that helps consumers file their taxes and also facilitates calculating a realistic amount of refunds that will generate for you going forward.
The authorities get your tax returns through the app as it is so linked. As a bonus, you’re monitoring your outflows with the software’s aid in order to pinpoint the exact worth of your checking account.
TurboTax prices vary looking at what reasonable information you provide during the setup process. As an example, if you wish to file for an income tax refund, TurboTax charges a flat fee per return no matter what percentage of returns are filed using their software.
After considering the variability of personal finance planning tools available today and therefore the factors to contemplate in choosing appropriate tools, it’s evident that this modern problem cannot have a straightforward solution.
Each set of problems and situation is exclusive, and thus only the individual can determine whether a specific tool would apply to their circumstances. Ultimately, as master of your ship only you can decide what aids you and what hinders your efforts toward fiscal freedom.
However, it is pretty common to conclude that tools that cost little to no money make more sense for individuals due to the shortage of commitment. While for other consumers, commitment to a paid program is an easy price to pay if it provides way more functionality.
If you are not sure where to begin when it involves personal finance, there’s no harm in trying out some different options until you discover something that gels best with your needs.
