Nothing beats self-evaluation. Sometimes, you just have to set your own checks and balances in order to hit your financial goals.
So, here are a few personal finance questions that you should ask yourself at intervals.
1. How much do I make?
This question might seem a bit ludicrous. However, when you factor in the reality that a lot of people have multiple streams of income (which might not all come in at the same time), then it’s important to take note of exactly how much you make to enable you plan better. You really can’t plan for money that you don’t recognize. Answering this question is key to answering the subsequent questions. Needless to say, if get paid from a business you run, you should be calculating your profits or the salary that you pay yourself.
2. How much do I owe?
So, you’ve answered the first question successfully. However, just as equal to how much you make is how much you owe. You need a detailed account of your financial liabilities. Knowing your liabilities help you set a financial plan for repayment and decide what you can afford to spend money on. In calculating this, be sure to factor in any interest rates or fines that might have accrued over time.
3. What percentage am I saving or investing?
Now that you’ve figured out how much you owe and how much you make, it’s time to figure out what to do with the balance. Saving is an awesome way to store money for future investment opportunities or to take care of any eventuality. Financial principles recommend a person save 20% of his income. This money put aside can be stored in financial institutions or straightaway in low risk investment schemes. The goal is for this money to be separated from easily accessible funds or better still to accrue interest.
4. What should I spend more on or less on?
Now that you realize how much you make, and how much you owe, it’s time to decide what to spend more on and what to spend less on. In order to fully answer this question however, you will have to take inventory of what you spend and how much you spend on them.
Necessities are an essential part of life and financial principles recommend spending between 50 – 70% of one’s income on necessities.
By the definition of the word necessity (a thing that is indispensable), the word is quite subjective. Whilst there are some things that are generally indispensable to everyone (food, shelter, clothing), many others are either dispensable or indispensable depending on the user. The underlying question would be; can I do without this? Our advice would be to spend more on maintaining or improving the system that makes you money; this includes yourself. From getting a car to help you ease the stress of traffic, to going on a vacation to relax your mind and body; the most important money-making system to you, is you. So, be sure to include you as a necessity.
You can reach out to us to take advantage of our Loan, Investment and Advisory packages to help you hit your financial goals. All you have to do is visit www.efinanceng.com, click on the apply now button and follow the prompts. Alternatively, you can call 070033462623 to speak with one of our agents.