Good morning great lions,
Woke up this morning alert and active, because I know there are more grounds to cover.
In the past I used to struggled with managing my finance either one gotten through personal investments or earnings from employments and other vocations. One thing I know for sure is that you can actually wipe through the money you spent your whole month working for within the first week of receiving your salary or at worst, some people already fall into debt before their salary comes.
I have experienced both the former and the later and I can tell you for sure that neither of them are a good situation to find yourself in.
While most people can argue that their reasons for not being financially buoyant enough is because of poor renumeration in their employments or poor business turnover due to economic downturn, Alot of us struggle financially because of lack of financial literacy leading to poor budgeting, lack of savings and horrible spending habits.
In this post I'm going to give you meaningful insights on proper management of finance in other to build towards future financial freedom.
1.Cash flow
I love the concept of spending money, yes because money is meant to be spent. But then the basic things we spend money on goes a long way to talk about our level of financial literacy.
Spending is not bad, but extravagant spending is what is really bad. Show me an earner who spend all his earnings on things that do not generate income and I will show you someone who is tending towards lack and penury.
A. 50% income should be allocated to necessities
Of course bills must be paid,
Adequate shelter must be provided
Good food to eat
Good clothing, not necessarily flashy,
One must have good time with friends and family.
B. 30% of income goes to personal development
Could require one to buy a new book, a new gadget, enroll for a class or tutorial.
Improving ones knowledge towards a better tomorrow is a necessary tool to keep being relevant in your chosen field or profession
This is even more important when you're trying to change career or switch line business.
This could also mean attending paid seminars and meet ups that you know would impact your finances.
These are necessary for future opportunities and networking that would push you towards your desired goal.
C. 20% of income goes to savings
The only prove of financial growth is a good portfolio.
Building a life of financial freedom requires that one set's aside money for savings. These are kept in a different account that cannot easily be assessed to prevent the temptations of going to use it, this is important especially for beginners.
As simple as it may sound, the discipline to save is hard to imbibe. I consider it a quality one develops and sharpens as you get better with financial management.
NB
It is also important to set aside money for protection like
Insurance fund
Emergency fund
Investment fund
These funds are always neglected especially in the early days of building financial freedom, but it's important cannot be over emphasized hence the importance of not neglecting it. It is majorly gotten from funds kept in savings ones it has reached some level of maturity..
I would elaborate more specifically on some of these areas in my next post.
I believe financial freedom is achievable and we can all achieve it together.
Thank you for checking out my blog, do feel free to drop your comments, upvotes and reblog. Also come back some other time as I will be dropping other important finance lessons.
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