Why it is very important to have a plan for our personal finances

Having a plan in financial matters will always give us greater peace of mind, control, and opportunities for growth, as well as greater economic resources in the short, medium, and long term. This is the best way to learn how to plan and take advantage of the mechanisms that exist.

Why it is very important to have a plan for our personal finances
Making a plan for financial matters will always give us peace of mind. Image by Pexels from Pixabay

Planning financial matters will always give us greater peace of mind, control, and opportunities for growth, as well as greater economic resources in the short, medium, and long term. Let's learn to plan and take advantage of the mechanisms that exist.

Regularly when we wake up, we make a plan about what we are going to do that day. It may not be a rigorous plan, but if it is a weekday we know that we are going to go to work and what tasks we have to perform to cover our days, such as taking a shower, having breakfast, making a decision about transportation, the clothes we will wear, or other things that seem minor.

In the case of the weekend we plan where we will go, some sport or recreational activity we are interested in doing. That is part of our life and sometimes we don't consider it as formal planning. They are plans that are carried out immediately, that can even be altered at a given moment and nothing much happens if they are not carried out as we had initially proposed.

However, there are other types of plans, those that are carried out in the medium and long term, and if they are not implemented, altered, or not carried out, they can become a problem. Because they also imply the loss of time, resources, and opportunities; at the same time they confuse us because they do not allow us to know where we are going, what we are looking for, and what our objectives in life are.

Hence the importance of always planning, no matter how simple or complex what we have in mind to do. To make plans it is only necessary to analyze the present, choose alternatives and execute them in a certain time, so that we can reach the goals we need or that are more convenient for us.

In this way, a plan, preferably, always has to be related to any decision we make, since it will help us to have more control in our lives, reduce uncertainty, as well as take advantage of the time, opportunities, and available resources. If planning is important in all aspects of life, imagine what it means for our personal finances. Let's take a simple example.

We can plan a new route to get to work early, the possibilities are endless; but planning will allow us to foresee changes such as travel times, comfort, and even transportation costs. If one day we decide to go to work by cab and we usually take the subway, we must consider the traffic congestion, the route and carry enough money in the bag. Having a plan, then, allows us to see what changes the future holds and establish measures to deal with them.

Just as it is important that we have plans with our family, partner, work, friends, or with any activity we do or want to do, it is very important that we also have them with our personal finances. If we plan how to distribute our income and the expenses we have to face, we can analyze our current situation, choose alternatives and make the most appropriate decisions for our needs. This will give us greater peace of mind, control, and financial opportunities, as well as greater economic resources in the short, medium, and long term.

The budget

The first thing we have to do is to make a diagnosis of our personal finances, individually, as a couple, or as a family. The procedure is very simple, it is enough to register daily and for a minimum period of one month, all the expenses we make, even if we consider them insignificant, such as the peso we give as alms, the chewing gum or the tip at the supermarket. They must all be recorded, to reveal the way we spend our resources, our consumption habits and, if possible, detect those that we can eliminate, because when we review them they may be classified as superfluous.

Once this task is done, the next thing to do is to establish an amount for our expenses, (product of the previous analysis), and stick to it rigorously. To verify that this is fulfilled we will have to register again the expenses, but now with the utility approach to take better advantage of our income. Let's remember that the budget has a very clear objective, to order our finances and plan for the short and medium-term so that we can be calm and use other mechanisms for a longer period.


Once we have elaborated our budget and ordered our expenses, we can have the opportunity to allocate a specific amount for savings (it should be 10 percent of our income). It may seem like a lot at first, but if we plan properly it will be possible to set aside that amount and allocate it to savings without any damage to our personal finances.

To conserve our savings there are a series of products on the market that offer us some benefits, the most advisable thing to do is to verify the information regarding interest rates and commissions to be charged before contracting them. This will allow us to make a better evaluation to choose the account that best suits us according to the plans we have with that money. You can find the evaluation of the different financial institutions on savings accounts and a calculator, which can be very useful to facilitate your task.

The loan

Credit also plays a very important role in future planning. Within this category, there are different financial products, and the recommendation is that we always use them to our advantage. It seems easy and it is because this means that the credit does not become more expensive than it was initially, that is to say, we should not pay more interest or other fees that we can save with good behavior. Let's start with the credit card. It is a generally expensive product, which should be used as very short-term financing because, in order for it to be a tool for our personal finances, we must learn to manage the cut-off dates and payment dates.

If we keep an eye on these two dates, do not spend more than our budget allows, and pay in full so as not to generate interest, we will begin to see the benefits it offers and we can enjoy the promotions that are linked to this product, such as points programs (which is like cash), discount coupons, annuity exemption, mileage program (for travel), road and medical assistance, among others (it is important to verify the benefits offered by each card before contracting and evaluate according to what we can take advantage of to make it a real advantage).

The credit must be seen as an auxiliary in the acquisition of real estate, that is to say in the purchase of an apartment or a house; because it is something for which we are not generally prepared and we cannot face easily. In this case, we can make an analysis, seek advice and make the decision to contract a mortgage loan that offers us the best conditions for our needs; and here the recommendation is to try to make direct payments to capital during the first two years. This will allow us to reduce interest payments and lower the final cost. Perhaps one objective of the savings can be to allocate it to make these payments.

The investment

When talking about savings, we generally consider planning for the short or medium-term; investment will always seek to increase our money in the long term (5, 10, or 20 years), and can be used as a financial backup for forecasting. There are many mechanisms for investment in different private and public financial institutions. Regarding the information of the financial institutions, we can access the page of each one of them, or consult the different tools that are there to make an analysis of the investment that best suits us depending on amounts, terms, costs, and other elements that we must consider.


On many occasions when we hear about insurance, it seems that we are predisposed not to accept this product in any of its variants, because we have heard unpleasant stories about them, or we have even lived through them. But it is necessary to know the advantages offered by this type of product and get to know them to determine if they are functional for us and the benefits they could bring us in specific cases.

Let us always remember that insurance has a preventive and auxiliary function to support us in case of a loss or an emergency (situations can be varied).

We can approach an advisor to have a clearer idea of the role they play in our personal finances and rely on the information we obtain to analyze which one is better in our case. Let's keep in mind that the different insurance policies are designed with specific characteristics and there are many options available in the market. The best thing to do is to know them, analyze them and choose the one that suits us best before contracting.

Saving for retirement

Within long-term planning, it is necessary to consider saving for retirement. This mechanism can be considered through the use of a tool that is easily accessible to all workers. In it, we can make deposits as voluntary savings. These resources will grow over time and will allow us to have a better pension, in addition to giving us certainty in our resources, because the contribution amounts and the yields generated are periodically reported. Keep an eye on this mechanism, it will be important in the long term.

From the decisions we make, according to the short, medium and long term plans we have, and the use of the tools described above, we can realize which aspects of our finances we have neglected, in which we are doing things well and in which others we need guidance or help. This simple but very important mechanism can help us plan, and using it will give us the impetus to start improving our personal finances. It is worth a try.

Remember that if there is any doubt regarding budgeting, savings, credit, investment, insurance, or retirement; as well as any financial product or service, we can approach specialists and they can guide us to draw and fulfill the best plan with our personal finances.