Basics of Personal Finance Planning
A Glimpse of Vision 2030

Setting a Monthly Budget to Help Achieve Your Goals

 

Starting from the principle of building a solid and prosperous economy of tomorrow, which is one of the most effective pillars of Vision 2030, personal financial planning basics are crucial for developing personal finance and savings skills.

The objective of the Financial Sector Development Program is to develop a diversified and effective financial sector that supports the development of the national economy, stimulates savings, finance, and investment. This is achived through the development and deepening of financial sector institutions, the enhancement of the financial market, and empowering society's financial planning.

At The Saudi National Bank, we strive to empower the Kingdom's national aspirations and further strengthen its pioneering position on various economic levels. Today, we are pleased to be an integral part of this interactive system, which aims to serve our citizens and customers above all, in a way that achieves their financial goals in line with their aspirations for a promising and better tomorrow for all.

 

Because financial savings are and continue to be one of the key catalytic institutional foundations for effective and viable economic development, we must activate the incentives and personal motivations that encourage the preservation of money, and utilize it correctly in ways that benefit our customers. By doing so, we can contribute to the realization of our national Vision 2030 goals.

In this brief introductory publication, we are pleased to provide you with some helpful advice and practical steps to better achieve your personalized financial planning goals. Our aim is to make it easier for you and your family to meet these objectives.

 

Personal Financial Goals:

Avoiding fiscal deficits

Buying a house

Children’s education  

Saving for retirement

Entertainment and personal desires

Covering emergency expenses
Investments

Building children’s future  

Savings

Covering basic expenses

Increasing income and its sources

 

Emergency/Non-Permanent Expenses:

Vehicle maintenance and repairs

Restaurant and event expenses

Medical emergency treatments

Vacation

Savings and Investments:

Monthly savings

Investments

 

There may not be a specific amount of money to save monthly. This depends on factors such as age, income and other financial goals, including any outstanding debt.

• It is advised to say 10% to 15% of your total income for the retirement plan
• Establish a feasible savings plan and adhere to it

 

Income:

Basic monthly salary or income

Lease/monthly interest

Other revenues

 

Basic Monthly Obligations:

Rent/Housing Loan

Vehicle loan

Service expenses

Credit card installments

Housework salaries

Other

 

Daily Expenses:

Food

Transportation/fuel

Medications and medicine

School tuition and expenses

Entertainment

 

How to Control Your Expenses

 

Follow these tips and watch your expenses decline significantly:

 

• List your basic monthly expenses at the beginning of the month to evaluate your monthly financial status.
• Allocate your income towards expenses while setting aside a portion for savings and emergencies.
• Be mindful of spending on items that are not included in your list and save them for the following month.
• Use your credit card only for necessities and during travel, and adhere usage advice.
• If you have sufficient savings, consider investing them in low-risk funds.

   

  Budgeting is usually associated to two factors:

   

  1. Difficulty in compliance

  2- Difficulty in determining essential expenses versus luxury expenditures

   

  Tips to Track Your Expenses

   

• Get into the habit of writing down your daily purchases.
• You may be surprised to find that unnecessary purchases drain your income.
• Allocate a reasonable monthly amount for each item.
• Avoid overspending or saving excessively; aim for a reasonable balance.
• Prioritize the pay-as-you-go principle.
• Before paying your bills and obligations, ensure to set aside a certain amount for investment, savings, and building your future. This amount should not be expended.

   

  Savings are more important than desires. Ask yourself, do you always use these purchases for necessary needs, or are they merely temporary luxuries?

   
  Start Saving for Your Future

   

  If you want to secure your future after retirement, start saving now until you reach retirement age, preferably in consideration of the following matters:

   

• Pay off all your debts
• Start saving immediately
• Do not hesitate to invest your funds, as they will decrease in value and purchasing power over time due to inflation
• The lack of investment in your saved funds deprives you of a dividend yield that can help you achieve your goals

 

Safeguarding and Maintaining Your Wealth

 

Beware of greed and haste in pursuit of profits while searching for investment opportunities. Also, avoid putting yourself at risk by engaging in a trade and/or field without sufficient information.

 

Financial Advice for Young People

 

Many young individuals may not feel adequately prepared to manage their finances as the navigate life after secondary school. To effectively handle your money, let’s explore the key aspects of money management. Always remember that you don't need an advanced university degree in finance to an expert at managing your funds.

 

1. Learn self-control

By parcticing self-control, you learn the art of delaying the satisfaction of desires to maintain and control your money whenever you find it easy.

 

2. Track your expenses

You will discover that managing small daily expenditures has a significant impact on your financial situation. The best way to measure this is by diligently managing your budget over the course of a month.

 

3. Explore investment opportunities

Consider investing a portion of your savings in various risk investment funds with different risk levels—low, medium, or high—based on your age. Before making any investments, thoroughly study the status of and growth of these funds in previous years.

Teaching the Value of Savings to a Child

 

Teach children the value of savings and money by introducing them to the concept of a piggy bank. Encourage them to collect their own money in order to obtain valuable goods and fulfill all their needs, instilling a sense of self-reliance.

 

Let them pay the simple expenses of books, toys, or any payments related to their personal use, such as cellphone bills or goods.

 

The three best ways to start saving are:

 

1. Take some time to brainstorm, and you will find many ways in which you can save money
2. Create a balance sheet to track your income and expenses
3. Allocate a portion of your monthly income to savings, and consider opening a savings account