My Sensible Financial Plans for 2008

My finances, since I quit the corporate world last year, is in shambles. There is a huge difference between earning a fix monthly salary and a project-based income. As my projects begin and terminate at different intervals and dates, so is my income there from. I must admit, I have mismanaged my finances this year. I have to rectify this before I run into big debts. Here is my three-pronged sensible approach to a well managed finances this coming new year:

1. Priority Spending

Needs should always take precedence over wants. I will make it a discipline to separate the wants from the needs. Spending unnecessarily on things just to satisfy our cravings can easily ruin our budgets. You enjoy now, for a moment, then suffer later, for a long time. This can be avoided by prioritizing our expenditures on those things that are really needed. Do I have to buy a brand new car today, or settle for my reliable old car? Should I replace my old flat TV with the latest HDTV in the market? Nah! These things can take a back seat for now.

2. Smart Investments

There are many available investment options for us to choose from. Today’s potential investments include gold and jewelries, property, fixed income instruments, mutual funds and of course, life insurance. Given the plethora of choices, it becomes imperative to make the right choice when investing your hard-earned money. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets. Life insurance is money that you do not see today but will prove to be a reliable ally in the future, for you and your family. For 2008, I will be investing on additional insurances for me and my son. One of which is an education insurance for his college education and another medical insurance for myself.

3. Forced Savings

We save money for different reasons. Each of us has some goals in life for which we need to save. I have noticed that as we go through life, these goals change and therefore our financial goals change too. The instrument in which we invest should offer corresponding benefits pertinent to these changes. In my case, where I am still adjusting with my erratic income stream, I am considering a forced saving scheme. Regardless of the amount I will receive from my paid projects, I will set-aside the 20% into a savings account. This money will only be used for extreme emergencies only, so that I will not have to resort to quick or short-term loans when the need arises.

Am I making financial sense here? I invite you to give your ‘personal finance resolutions for 2008. Have your say now please.

A prosperous 2008 to you!