Financial Planning Guide: Steps Towards a
Secure Future
Do you feel like life's expenses are always chasing you and your salary is barely enough? Is the dream of financial security turning into a real source of anxiety? Don't worry, the solution is easier than you think. Financial security doesn't happen by chance; it's the result of a well-thought-out plan you start today, even with a small amount. Every day you delay is a lost opportunity, and financial accumulation needs "time" more than just an "amount."
The Importance of Early Financial Planning
The first step toward stability is early
planning. Don't wait for your salary to increase or for your circumstances to improve. Start now. A comfortable retirement, financial freedom, and achieving your dreams don't create themselves—you are the one who creates
them.
How to Calculate Your Future Needs
It's simple. Ask yourself two questions:
- How much will you need per month to live on after retirement?
- How many years do you expect to live after retirement?
Let's take a simple example: if you expect to need 400 riyals per month for basic living after retirement for 20 years, the total amount you'll need is 96,000 riyals. This amount only covers basic living, so what about the dreams you want to achieve?
Smart Budgeting: The 50/30/20 Rule
To start saving, you must first control your expenses. Here's a simple and effective rule:
- 50% for necessities: This includes rent, food, transportation, and basic bills.
- 30% for fun and flexibility: Things like entertainment, shopping, and social activities.
- 20% for saving and investing: This is your key to the future.
To get the best results, track your expenses weekly instead of monthly; constant monitoring makes a big difference.
The Emergency Fund: Your Real Security
Before you start investing, create an emergency fund. This fund is an amount that covers 3 to 6 months of your basic expenses. Its importance lies in protecting you from debt in case of an emergency like job loss or a health issue. Start saving a small amount monthly, like 100 riyals, and watch how your security multiplies over time.
Invest for Your Future... Even if You're an Employee
Investing isn't a risk if done smartly. Start slowly through monthly investment funds and use the auto-invest feature that many banks and investment companies offer. Compound interest is your biggest friend. For example, investing 100 riyals per month for 20 years can grow to be more than 40,000 riyals.
Avoid Common Mistakes
There are common financial mistakes many people make. Avoid them to ensure your security:
- Delaying saving: Don't wait for a salary increase. Start today.
- Relying solely on government retirement: It may not be enough to achieve all your dreams.
- Mixing saving with investing: Each has a different purpose. Saving is for short-term goals, and investing is for long-term ones.
Remember, each of these mistakes can cost you years of financial security. Financial planning isn't a luxury; it's a necessity to turn your future from a mere dream into a tangible reality.