Early Retirement Planning

I don’t know about you, but at the end of every tiring day at work, I always remind myself that I work hard because I want to retire early. It sure makes everything a lot easier to face. Still, what exactly is the meaning of early retirement?

Certainly, it’s not just about waiting for the early retirement age to receive your pension, because it’s more than that. About 40 or 50 years later, do you think the money in your retirement funds will suffice to sustain your retirement needs? By then, do you think you have paid off all your debts, and have enough to meet your living expenses and other activities you intend on doing?

While retirement conjures thoughts of vacation, catching up with your hobbies, and spending quality time with your loved ones, there are many more factors to look into. Where will you live and spend your remaining years? What do you plan to do with all those leisure time? If you get bored and suddenly miss your job, it sure wouldn’t be easy to get it back.

To help you get started on planning your retirement early, visit https://www.gov.uk/plan-retirement-income

Budgeting 101

budgetMany of us are misled to believe that in order to save effectively, you must earn more. While it is true that a higher salary can indeed help you achieve your financial goals that much sooner, what I realized over the years is that your earnings have very little to do with how fast you can save money but rather it is your budgeting skills that matter most. In fact, when I was younger, I found that I tend to spend more whenever I earn more, and soon enough discovered where the problem lies- my lack of proper budgeting.

Budgeting is how you allocate your financial resources to meet your daily expenditures, from food, utilities, transportation, to savings and debt repayment. It’s how you set limits to your outgoings and monitor whether your every financial move is right on track. No matter how much you earn, without a proper budget, all your money will disappear quickly.

The most difficult part of sticking to a budget is the feeling of being restricted. When we’re following a laid out plan, we sometimes feel deprived and caught between giving in to our wants and sticking to the goal. More often, the result is we are often swayed.

For me, the key to combat temptation is giving room for our desires. Many individuals force themselves to comply to saving 50% of their salary, only to find themselves exhausted and unable to commit to the long term goal. When you’re working overtime every day, with most of your take home pay going only to basic needs and your bank account, I won’t be surprised if you give up.

While commitment is truly important, I don’t recommend being too hard on yourself. My friends always ask me how I remain disciplined when it comes to handling my finances and I always tell them the same thing- Leave a little room for fun. It’s really important to ward off boredom and temptation.

They also ask me how much they should save each month, but believe it or not, there isn’t a precise answer. While there are saving guidelines that you can find helpful, I always advise that there should be no rules. For me, saving 5% of your income diligently is much better than the unsustainable 50%.

For the sake of having a guideline, take these figures for example. In my first three years of work, I committed to saving 20% of my salary. Being the typical new earner in the real world, there were so many things that I still wanted to do and wanted to buy. I recognized those feelings and admitted to myself that saving 50% of my salary would drive me insane. What I did instead was use only 50% for basic needs, allocate 30% for my wants, and 20% for savings. After every few years and as I got used to managing may finances well, I increased my savings to increments of 5%.

The bottom line here- Be realistic. Consider what you feel. While it’s not right to put savings on the back burner, you can do this without feeling restricted. Adding an element of fun and excitement can go a long way to your budgeting journey. For more helpful budgeting tips, check out http://money.howstuffworks.com/personal-finance/budgeting/10-tips-for-staying-on-budget.htm

My Introduction

Hey guys, my name is Yasmin Bibi and welcome to my new blog! I am a fan of everything related to finance- savings, investments, loans, insurance, etc. and have a passion for educating readers regarding the importance of managing one’s personal finance. Life is filled with surprises, and I believe all of us need to know everything there is to know about money and investments to plan our future accordingly.

My main purpose for starting this blog is to raise community awareness regarding the importance of financial planning. I want to help, in my own little way, educate the common citizen about the value of money and its proper management.