Written by R. A. Stewart
“Where there is no vision, the people perish.”-Proverbs 29:18
Financial planning takes vision. It also takes a bit of maturity and responsibility.
The choices you make today will affect the choices you have available to you tomorrow.
It is all about making provision for unforeseen circumstances and not all circumstances which you may find yourself in are unforeseen.
If you have plans to get married and have children then that is not an unforeseen expense, therefore, if you are smart, you will make provision for such life changing events.
An unforeseen event is one where you have been injured in an automobile accident or were to have an accident at work.
For this reason it is important to set your finances up in such a way as to have some kind of cushion against financial shocks.
There is a scripture in Matthew 25:1-13 about ten girls. Half of them were wise and half of them were foolish. They were all invited to a wedding. The wise ones brought enough oil for their lamps, but the foolish ones did not. The foolish ones had to go back and get some more oil for their lamps and by the time they arrived at the wedding the door was closed on them.
That was the consequence of not making provision for their journey.
The wise girls made provision for their journey but the foolish ones did not.
There are consequences to living for today with no thought to the future. If you spend all of your wages within a week and are broke by the time the next pay day comes around you will always be at the mercy of lady luck. If an unexpected expense occurs it will be a great inconvenience to the broke person. A dental emergency, illness, accident, or a household appliance which we all take for granted breaking down can all occur.
Having some kind of emergency fund to take care of these is the responsible thing to do.
An emergency fund is considered short-term funds; that is, money you may require in the short term, therefore keeping this money in a low risk account is the best option for this type of fund. Investing in high risk funds, also known as growth funds, is not a sensible option. The last thing that you need is for the value of the fund to drop just when you need the money.
Your timeline is the key to finding suitable investments for your money.
Long-term money is funds which are needed after 5 years.
Medium-term money is funds which are needed from 1-5 years.
Short-term money is money which is needed within 12 months.
Discretionary spending money is what is used to feed these three categories. People who have debt do not have any discretionary spending money until that debt is paid off. As the proverb says, “The borrower is a slave to the lender.”
The bottom line is that it is essential that you control your money and not let money control you.
Certainly, the benefits of saving and investing your money cannot be underestimated. Building up your financial portfolio will give you more options in the future, but spending everything limits them. Investing will increase your financial literacy which in turn will help you to make better choices for your money.
About this article: The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore, discretion is advised. You may use this article as content for your website/blog, or ebook.
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