It is true that is always easier to skip planning, since it requires time, effort and checking how we managed versus what we initially planned. For example, if you go on picnic for barbecue it is the most easily just to get into a car and stop by to buy a few things. But when you get to your place, you can realize that you bought meat, but you forget spices, or that you bought coal but forget the grill. So, you must admit that some planning prior to your trip should be good.

Planning is important in every aspect of your life. Especially it is important because of your financial health. Without planning you will not have real control over your incomes and outcomes. Money will be just coming in and going away from you. Whether you will have money leftover or be in debt at the end of the month is only matter of coincidence.

You need to plan your personal finance in specific periods and to revise periods after they are gone. Example, you set up income and outcome plan for a month and after the month has ended you can check how was your spending and saving vs. plan. You will be amazed how much money you loose on trivial things, that you bought simply because you were probably bored at some moment and went for shopping, or you didn’t re-think before buying something.

As an example of personal planning it is good to take a look on finance planning of the companies. Business planning is very structured and rigid, but is highly effective. You do not need to be so strict, e.g. to sign allowance to your self and to take receipt just to go to watch some movie. But still you can learn a lot from Business planning model of financial management and apply it in your personal finances.

Business financial planning is divided in several dimensions. Time dimension covers a full year, divided in quarters and months. During the business planning mid term period of, for example, 3-5 years is considered for setting the strategic guidance. Second dimension is the balance sheet that have incomes on one side and expenses on other side of the sheet. At the bottom of the sheet some profit should be generated. The income side of the balance sheet should contain income channels, e.g. sales, interest rates, rent, royalties, … The expense side should have budget lines with allowance for different purposes, e.g. utility costs, salaries, investments, raw material…

This should give you a glimpse into the structural approach of financial management that you can use for your personal financial planning.

First, define your time periods and goals for every period. You do not need to specify goals too accurately, but at least set them roughly.

- Short term – Monthly Financial Planning should be the basic period, simply because usually you receive salary in monthly periods, as well usual monthly bills. Try to make monthly plan by setting the goal in term of spending. Probably you cannot make too big changes on income side in a single month.

- Long Term – Annual Financial Planning should cover summary of the monthly plans. But at same time you should expand your perspective toward investment of saving, as well as setting goals to construct auxiliary income source.

- Strategic Planning – Is the long term e.g. 5 – 20 years financial planning where you should include planning of capital expenditures like a car, house, scholarship, retirement plan, …

Now, since you got basic of temporal planning, try to involve some tools in your planning. You do not need some sophisticated accounting software. You can use simple tools like excel sheet.

Try to record your financial traffic in your personal accounting tool as much as possible. These records will help you to identify budget leaks, meaning expenditures that are not that necessary. At same time you will have a chance to plug these leaking holes in your budget.

In time, you will perceive you own financial flows from higher perspective. This strategic perspective will develop your sense for financial management. It might be unpleasant at first, since it is easier to close one eye and to spend without to much thinking. Still, personal financial management requires some discipline.

Try to identify your financial areas of improvements. For beginning use easily achievable targets e.g. save 100

If you want to control your finances, you can’t let them control you. You gain control by making wise day-to-day choices, following the path towards long-term goals and by building a foundation of necessities, such as insurance and emergency savings.

In order to do any of these things — make choices, realize goals or save — you have to budget. I know it doesn’t sound fun. But it is the one way to achieve financial success.

Start by thinking about it this way — by sticking with your plan, you will gain more than you ever expected. Budgeting will allow you to realize your goals. You will have more money to spend in the long run.

No matter how much or how little you make, budgeting is essential. If you already think you know where your money goes without writing it down, try writing it down for one month. You will be surprised at what those pennies are adding up to be.

Budgeting lets you know where your money goes. You are managing it. You are able to start saving for a home, for college and for retirement. You can even find room for that trip to Hawaii.

Someone said once, and I really like the idea, that you can’t just make more money to have more money. You have to spend less than you make.

I will admit that software programs make it nice to track a budget. I used one for years to track our spending through our checking accounts. Not only can you easily balance your checking, you can print out reports that divide your spending into categories. You can easily print out the totals of your tax deductions. Many programs even allow you to scan your tax receipts in for safe keeping.

We no longer use the program, due to my husband wanting to help with the financial management. He is uncomfortable with computers. So we keep log books instead. The key to tracking your expenses isn’t necessarily to write down everything you spend when you spend it. It is to ask for and keep all of your receipts for things. If you don’t get a receipt, you’ll have to write it down.

So either way, take the time to add up all of those spending categories. For example, a daily cup of coffee can cost you $547 a year. If you smoke two packs of cigarettes a day, you are spending approximately $3000 a year. If you eat your lunch out every day, you could spend around $2,600 a year. Three drinks after work once a week can add up to $1092.

Cut all those things out and you could save over $7000 a year. That’s a lot of money. Did you know that coffee, cigarettes, lunch and drinks were costing you that much money?

By budgeting and tracking your spending, you are able to see the areas you can cut back on. You may find that you don’t have to sacrifice very much to achieve your goals. After all, what is more important, putting $7000 a year into your retirement savings or keeping up with your current spending habits?