Having a plan is important in many areas of life, I would feel it is vital in personal finance, yet a surprising amount of people totally fail on this matter and go through life in an ad hoc manner and they are often wondering why some people seem to do better even though they don’t earn as much as they do. Animals in the forest don’t worry about finance, they do worry about food though, hence they gather for winter, squirrels have figured this out so it is disappointing, given the superiority of human intellect, that many private individuals have not planned for an ‘economic’ winter.
A simple method is a budget, it can be complex or it can be crude but in either case having a crude one is better than having none. Sometimes this is worked out using percentages, for instance:
After tax income x 60% = all expenses (mortgages, bills, food, entertainment etc.)
After tax income x 10% = discretionary expenses (something you may have buy from time to time)
After tax …