Keys To Financial Planning – A Newbie Guide to Allocation of Your Hard Earned Money

What are the keys to financial planning a newbie at work should know? Do not squander away your hard earned money. Do not think you are young hence you have a lot of time to save for your retirement and that dream home.

Money does not work that way. It has its own set of rules and if you do not obey it, you will pay for it in double. What are some of the keys to good financial planning?

1. Pay Yourself First
This to me is one of the best keys to financial planning. It has served me very well. Pay yourself first. If you have not heard of the concept, learn it and internalize it. It basically means when you get your pay, put some aside for yourself immediately. Better yet, siphon it to an account where withdrawing is tough. Almost always you will still have money to take care of other bills when you pay yourself first. This money is for a rainy day, emergency cash and cash for investment opportunities that may crop up.

2. Living Expenses
You can then start to pay off all your living expenses bills. There are the cell phone, rent, student loan, car loans, utilities bill, etc. to pay off. Of course the grocery bills and transportation costs. I like to keep leisure out of these living expenses because to me these are priorities, if these aren’t taken care of, it can lead to debt accumulation. Especially paying off loan installments where interest can compound one month after another.

3. Save for the Future
Under save for the future, lump the desired lifestyle you want for your family in here. It means taking into account what you want for your future. Is it a house, paying for your children's education, etc?. Financial freedom starts when you know how to manage your money. Think about investments in this category. You do not just save this money in the bank, you use it to invest in order to hedge against inflation and also to grow your money. This is an important part of keys to financial planning as it helps grow the money. Inflation is a money virus that will shrink the value of your money. Use investment as an antidote for this.

4. Personal Development
You need to continually improve yourself. I know at a young age you may not think about this too much. Start this habit early and allocate, even if it is a small sum for personal development. For example, something as simple as reading about managing money and investments. What about work related books to help you improve your work quality? All these go a long way in making you a better person.

5. Leisure
Of course, you must reward yourself. There is no sense in working so hard for the money but not being able to enjoy it. Use this pool of money in moderation though. Allocate some money for leisure - weekend breaks, movies, or even the yearly traveling.

6. Charity
You do not exist in this world alone. You need to know you are truly blessed and one way to show gratitude is to contribute the money you have earned. Rich are those who can give, for one who is poor has nothing to give. Of course, for the purpose of this article I am talking about giving money, but you can go beyond that like giving your time and energy.

The keys to financial planning aren’t all about investments and saving, it includes fun and taking care of others as well. Do not be afraid to ask questions and read more about financial planning. The earlier you plan the better it will be for you.

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