All our lives today are consumed by the many commitments we have, our various responsibilities and the bustle of daily activities. With so much going on, it’s easy to let financial planning take a backseat. Even if there isn’t too much going on, somehow, we always seem to find excuses to put off financial planning. There’s something about “managing your money” that puts people off, causing them to avoid the seemingly daunting task. Then, the guilt that comes from constant excuses, the nagging worry of paying off debts, and the vicious cycle it all creates leads to an unnecessary amount of stress. I know, because I’ve been through exactly this. However, after some hard-learnt lessons, I realized that managing my finances would help me lead a more stress-free life – and surely it did. A little organization can go a long way in terms of getting your finances in order, and really, the task isn’t as scary as it seems. With a little effort and time, you will be on top of your money management, and trust me; it will make you a happier person. #1. Create a Budget First off, you need to create a budget. Your budget should be realistic rather than idealistic. Examine where your money goes over a span of three weeks to a month. Note down what spending is absolutely essentially, what is somewhat necessary, and what is completely spontaneous. Based on your findings, create a budget that will cover your expenses in a natural fashion, without allowing for excess spending but also one that gives you a little leeway based on your spending trends. #2. Create goals It’s important to create goals with clear deadlines that give you something to work towards. In his article on overcoming debt, Trent Hamm writes that prior to financial planning, him and his wife had very vague goals with no timeline to achieve them. This got them nowhere. However setting deadlines in terms of actual years gave them something to strive for, leading to a higher probability of achieving those goals. Goals can be anything from paying off loans by a certain date, to having enough money to buy a house sometime in the future. #3. Incorporate savings into daily habits To make sure you are on the right path to meeting your goals, you need to change certain aspects of your regular lifestyle. Small changes in your daily habits can lead to a sufficient amount of extra cash at the end of the month or year. Before spending on a certain item, ask yourself how necessary your expense is, and whether it will tie into your goals. For example, if you spend a lot of money on your car, as most Americans do, consider better car financing options, like getting an extended warranty, or maybe even learning how to fix basic car problems yourself so as to not spend unnecessarily on mechanic shop visits. Taking the time to look for alternative measures in any aspect of daily life, can very beneficial over time. Other small habits that could contribute to overall saving include turning off the electricity, carrying home-cooked lunches to work instead of eating out, cutting down on coffee runs. Also, fixing home problems yourself (if possible) rather than hiring outside help is a good way to save a little extra. #4. Think about sourcing supplementary income Having a source of supplementary income is extremely useful in times of emergency, or when you need to spend large amounts (think: emergency medical bills, loss of a family member, holiday season etc). Apart from your full-time job, it might be worthwhile to think about ways to extra money on the side, that acts as a cushion when you need one. Having this “cushion” will also allow you to stay in line with your goals if not reach them quicker. In a previous guest post, I outline 8 ways to make some extra cash. The crux of this article if to leverage any current skills you might have, or develop new skills, turning them into a means of sourcing extra income. I write about everything from taking courses in medical assisting so as to develop a skill that could allow you to earn up to thousands more a year, to bartending in your spare time, or even getting your work published in magazines/newspapers that pay. Doing something you are interested in, while also getting paid for it is a wonderful way to make a little extra dough, and relieve some financial stress. #5. Plan for the long-term Personal financial planning isn’t only about meeting short terms goals, and living comfortably in the present. A critical part of personal finance management is planning for the long term, so that you are able to uphold your standard of living even when you may not be in a position to work or have a steady income. Remember: Always think about the bigger picture. Some of the basics of long-term planning include having a savings account, a retirement and pension plan, and long term insurance. Opening a savings account is a solid investment. As you start saving, you can even invest the money in your account so as to “make money through money”. Even though retirement and old age are somewhat stressful to think about, it is essential to plan for this time. After all, you really don’t want to be struggling and stressing about whether you can afford a nice meal out when you’re in the later stages of your life! The key to having a healthy retirement, that enables you to live fruitfully and experience everything you want to experience is to start planning early – and that means now. Have an idea about where you want to retire, other plans during retirement, and what you need to do to make all this happen. Investopedia gives you a quick way to do some basic calculations about retirement, just to get the ball rolling. Tedious as it may be, you will thank yourself years down the line! Following these steps should give you a good handle on your personal financial planning. All it takes is that initial drive to sit down, get started and create that first budget. Prepare yourself mentally and stay motivated and before you know it, your newly acquired financial ways will become part and parcel of your routine. With a little discipline and dedication, and you will be less financially stressed and will surely be managing your money better than ever before – so take that first step, and get to it! Does any of this ring a bell? What are some of the ways you’ve used to get your personal finances in order? Images: “a woman with unpaid bills has many debts. unemployment and personal bankruptcy / Shutterstock.com“ ________________________________________________________________________________ Tweak Your Biz is a thought leader global publication and online business community. 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