Policy for Personal Financial Management
1. Goal
This policy aims to improve financial well-being, encourage long-term financial planning, and encourage responsible financial conduct. It offers advice on investing, debt management, saving, and budgeting to assist people in becoming financially independent and stable.
2. Range
Employees, independent contractors, students, and other stakeholders who want to develop their own money management abilities are all covered by this policy.
3. Goals
to promote wise financial choices.
to encourage prudent spending practices and budgeting.
to help achieve long-term investment and saving objectives.
to control and lower personal debt.
to accumulate retirement and emergency money.
to improve financial knowledge in general.
4. Guidelines for Financial Management
4.1 Setting a budget
Create a monthly budget to track your earnings and outlays.
As a general guideline, adhere to the 50/30/20 rule: 50% needs, 30% wants, and 20% savings or debt reduction.
To keep tabs on your spending, use financial apps or spreadsheets.
4.2 Management of Income
If at all feasible, diversify your revenue streams.
Give steady, legitimate sources of income top priority.
Plan according to net income (after taxes) and review income on a regular basis.
4.3 Cost Management
Tell the difference between needs and wants.
When necessary, cut back on discretionary expenditures.
Examine utilities, subscriptions, and other ongoing costs on a regular basis to optimize.
4.4 Emergency and Savings Fund
If at all possible, save aside at least 10% to 20% of your monthly income.
Keep three to six months’ worth of living expenses in an emergency fund.
To prevent missing donations, automate savings transfers.
4.5 Handling Debt
If as all possible, stay away from high-interest debt.
Use the avalanche (highest interest first) or snowball (smallest first) methods to pay off debts in a methodical manner.
Repay existing debt while avoiding taking on additional debt.
Author: Mohamed Yasin
