Understand your income: incomes are cash flows. The amount of money that flows into your hands either monthly, weekly or daily is what is referred to as income in a layman language.
The understanding of how much you get helps you to know the limitations and strength of your finance.
Your income dictates your living standard. Your income determines your expenditures per time. If you can really have the full knowledge of what comes into your hands you will be able to control the out flow of the same.
Because the consciousness of this will guide you on any financial decision you might want to undertake both in the present and in the future.
Budgeting: the word budgeting is one of those words we hear frequently either on the TV or the radio. Budgeting serve as the foundation of every financial and business plan.
Nothing actually works without budgeting in place. Jeremy Vohwinkle, the author of Budgeting 101 have this to say about budgeting; “ A good budget can help keep your spending on track and even uncover some hidden cash flow problems that might free up even more money to put toward your other financial goals”. Budgeting is beyond some tedious financial process which sucks both energy and time.
Budgeting keep your mind highly focused and give it a defined path through your spending (expenditures) and you incomes. When a budget is in place your finance is automatically put on watch and every unprompted expense can be put in check and the incoming cash can therefore be placed where required.
This create a balance between outgoing and incoming and thereby cut excess spending, keep tracks of the outgoing and the direction or what it is been spent on.
Another thing a budget helps an individual to do is draw a line between “wants” and “needs”. Most time there are misconception between our wants and our needs. In real sense, not all that our heart desires are really needful.
And since all you need is cut down your spending and put it on track, then you have to be able to define what you think your wants and what you also think your needs are. Your ability to do this will help you in the drafting and implementation of your budgets.
Budgeting wouldn’t just be enough if you are not committed to it. You need to have this in mind as a goal and a part of your life in order to push it through. Most people don’t really value the place of budgeting because they feel they are depriving themselves of life’s pleasures.
But the real pleasure is when you are able to maximize all you have and also avoid wastage in all ramifications.
Saving: someone once said that savings is the path way to financial freedom. Some fellows see no need for savings because they felt they are working and the money is flowing. And some people also feel the more they spend the more the money comes.
But the fact remains that money flows in the direction of the man/woman who knows how to put it under control. The thought that money is like a spring and that once it starts flowing it will keep flowing is a primitive mindset.
When you see a man who retire poorer than he was in years past, check him out and you will find out that such fellows are squanders. They ate both their fruits and its seeds together.
The book “The Richest Man in Babylon” tells us more about savings. Savings are seeds placed aside for planting seasons. All you have is not for spending.
Parts should be kept in reserve i.e. your savings account, some for your personal upkeep, some other for investment purpose and maybe the rest for your extended family or whatever you might have in mind.
There have been arguments between people and experts in the financial world about how much must a person saved per time, which can be either monthly, weekly, daily and in some case hourly.
Some say 10%, others says 20%. But there is just one side of the argument I tend to support which is saving depends on an individual financial goal, but I also support the notion that the least an individual should save should not be less than 10% of his/her income.
Depending on your desire, you can go beyond that if you can move on with the rest.
One important thing people don’t understand is that saving is the first step to financial management. If you can’t save and all you know how to do is spend then you have no financial future and therefore be ready to retire poorer than you’ve ever being.
Savings comes in many ways and there are also many reasons to save. Below are few:
Invest your money: the call for investment cannot be write off. Investments come in diverse forms, vehicle or portfolios. What define the kind of invest you involve in is a matter of choice and their respective characteristics.
I will not go deep into this but will mention some few investment portfolio you can engage in. it will all depend on you to find out more about it in order to gain deeper knowledge about it or in order word a financial expert will be your better option.
Personal development: many might actually be asking what has this have has to do with money management. The fact remain that what you don’t really know is far beyond you.
Many individuals actually mismanagement all they have just because they lack the necessary knowledge and skill and how to go about it.
Knowledge is the number one requirement when it comes maximizing our resources and life in general. The simple reason why many never surpass their little challenges is simply because they are not harmed with the knowledge needed to scale through those challenges.
Time has proved it that what you know goes a long way in the determination on how your life ends.
Investing at least a book per month is not too much compared to what is in stock in it for you. Many people have met that find it hard to pick up books to read always give me almost the same excuses that what most writer write are usually not applicable to their life and their environments.
One thing is certain, laws and principles are universal. The same law of gravity that we in Africa can just but obey down does not change anywhere around the world.
There might be variation in the approach to situations explained but the principle serves us all. Knowledge is important and anyone who wants to grow must acquire it