Personal finance is not rocket science. Understanding it and actually practicing what should be done, nevertheless, are two different things. Most people understand that spending more cash than they have is problematic, to say the least. But that does not prevent millions of individuals from accumulating more debt. People still fall into these ‘money traps’ and never become richer because they never learn. Here are 7 essential lessons to help you live a richer life.
Setting goals is key: There’s an old adage that says ‘if the purpose of something is not known, abuse is inevitable’. Goals serve as a reference to our daily lives. Setting financial goals gives us a clear picture of what we want financially and actions needed to achieve them. Before one doles out cash for any form of transaction or purchases, one needs to be sure it falls in tune with the set goals.
Spending money on irrelevant items: Watch those who lament over money. Most of them spend unnecessarily. Those adverts of products and services displayed on your screens and on air are to make you believe that they bring more happiness when you purchase/patronize them. This is rarely the case. True happiness comes when you’re satisfied with the value your relevant purchases offer you.
Use money to buy memories: Use money to buy experiences and memories that you will be proud of in the future. For instance, use money to make a home with your family. Make them your number one priority. Spend to make a home, not a house. This principle ensures that you get much value out of your money.
Money is a deceit: This isn’t what you think. At some point in life for instance, you will be offered employment that pays you more than what your dream job will and this only makes you lose sight of your true goals in life. Don’t focus so much on the money. Focus on building yourself in terms of skill development and focus on your own goals. The money will follow before you realize it.
Learn from past blunders: I have made financial mistakes and so have you. That is why we need to reflect on our past financial decisions to correct those errors when making new financial decisions. We must do well to avoid personal financial mistakes of the past, as well as learn from the mistakes of others. This should be enough to boost our financial wisdom and help avoid future errors.
Money is Emotional: Personal finance books tell you the best way to handle your finances is from an unemotional perspective. This advice will be worthless if it doesn’t work with your personality. Adopt a strategy that will help improve your financial goals. Money has emotions so it doesn’t stay at one place for too long a time. Treat it right, respect it and it’ll be with you for long.
The Financial Term of the Month: Net Worth
Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by annual operating losses or a substantial decrease in asset values relative to liabilities. People with a substantial net worth are known as high net worth individuals, and form the prime market for wealth managers and investment counsellors.
Start saving now: Adopt the 10% minimum strategy, grow your bank accounts, invest and make more money. You should strive to save at least 10% of your remaining disposable income. Doing so regularly irrespective of the size of your budget for the month or planned expenditure will certainly enrich you and secure your financial future.
By Solomon Sacky
(Tongues of dextrowordpress.com)