As students, we are taught that financial planning starts at an early age, but it seems easier to talk about financial planning than to actually implement it in our daily lives. Nonetheless, we can increase our net worth while decreasing the financial flab caused by excessive debt by observing a few simple rules.

Set Financial Goals
Dreams can become reality when supported with long-term planning. Whether the dream is as simple as paying off a small credit card debt or as complex as buying a brand new house, setting financial goals is the first step toward realizing it. You have to determine what is most important for your future, set a time frame for achieving it, and start today by saving and investing your income to accomplish it.

Monitor Your Spending
Someone once said, “Money talks...but all mine ever says is good-bye.” As our income increases, our expenses also increase, a problem that most of us face. When our basic income is increased, we think our standard of living should go up, but this is not necessarily true. We need to look at the bigger picture: what parts of our expenses are inflated due to overspending?

The usual suspects are entertainment, clothing, and groceries. These probably make up a significant portion of the expenses on your budget. A simple way to decrease expenses would be buying groceries in bulk and/or using food coupons. Instead of buying your clothes at Banana Republic, purchase them at the Gap or Old Navy, lower-end outlets of the same company. A simple 10 percent trim of monthly expenses from a $2,000 budget can produce $2,400 in savings at the end of a year.

Save Money
Before you receive your next paycheck, figure out whether you can afford 5 percent or 10 percent savings from your monthly income. When the check arrives, take the estimated savings amount and deposit it into a savings account. Do this with every paycheck, for savings should be a regular habit. Better yet, arrange for direct deposit of your paycheck, with part of it automatically going to savings.

Invest Wisely
Most people attempt to fund long-term financial goals with short-term investments. This type investing strategy is an oxymoron; long-term financial goals need to be funded with long-term investments, equities (stocks), mutual funds, or bonds. Short-term investments usually lie in savings accounts, certificates of deposit, and short-term bonds. Remember to use a strategy funding for each type of goal.

Budget Correctly
Establishing and sticking to a budget can help you achieving your financial goal. Budgeting can be complicated, but if you understand the basic layout you should be able to put together a budget for yourself. Here is an example:

Sample Budget
1 GROSS INCOME – before taxes 2000
2 Payroll Deductions - taxes 400
3 401(k) 100 4 Medical Insurance 50
5 Total Payroll Deductions 550
6 NET INCOME (1-5) 1450 EXPENSES
7 Savings (5 % of net income ) 73
8 Rent 500
9 Household (soap, etc.) 30
10 Utilities 100
11 Clothes 50
12 Debt Payments 100
13 Food (includes dining out) 250
14 Auto (gas, oil, insurance, etc.) 75
15 Entertainment 50
16 Total Expenses 1228
17 Income left over (6-16) 222

Your income left over (line 17) should never be a negative number. There always will be emergencies, but also you can invest the additional amounts in savings or increase debt repayment.

Budgeting is one of the most important elements of successful financial planning; without a budget, the money controls you.

Learn about finance
Even if you are not a business major, you may wish to take classes in personal finance, accounting, and taxes. Such classes will help you determine which decisions you need to make to maximize the return on your investment.

Business classes can also in help you sunderstand financing and the proper way to approach situations that deal with money. The more you know, the easier it will be to make decisions that create a lifetime of financial security.