PERSONAL FINANCE AND GOAL SETTING
What comes to your mind when you hear of personal finance? I'll be explaining the key things you need to be financially stable.
Our focus in this article is:
HOW DO I SPEND WISELY?
HOW CAN I MAXIMIZE MY INCOME?
HOW DO I CUT OFF UNNECESSARY SPENDING?
WHAT ARE THE FINANCIAL GOALS I NEED TO SET?
Let’s get down to business…
HOW DO I SPEND WISELY?
Pause for a while before reading further.
Answer this question.
What is wise spending in your terms?
So, let me give you a quick example to explain this term.
Quick example: Let's say I earn 100,000 in a month, for me, wise spending can be budgeting 50k for my needs(things I can't do without),30k for my wants and 20k for investment monthly while to another, wise spending might be budgeting 60k for needs,10k for wants and 30k for investment.
Please follow me closely!
If you noticed the examples I gave above, you’ll see that I mentioned two types of spending.
They are;
Consumption Spending
Investment Spending
Consumption spending: This simply means spending on your needs and wants which is in the example I gave above.
While…
Investment spending means spending on investment which includes investment in personal development or real investment options...
Please follow me closely, we are heading somewhere
So, wise spending is simply spending on both consumption and investment while I consider the opposite of wise spending to be spending on Consumption only.
Please note that investment spending as I explained earlier is spending on your personal development and other investment options like shares, mutual funds, etc.
So let me leave you to decide on whether you have been spending wisely or not.
Now, the reason why I had to emphasize Self-development as a part of the investment spending is that I know at this point, some of us aren't so much to be called a salary!
And also, my boss usually says something which I strongly believe in, which is, "for every 1% investment you make on personal development, it multiplies and yields you 100% returns" which should enable you to create multiple sources of income to enable you to invest in options like shares, mutual funds, and the likes. But that doesn't mean if we have enough at our level we can't start investing in things like shares, mutual funds, etc. Don't worry; I'll explain some of these options in detail.
We can start investing in these options if we have the money or stable pocket money entering our accounts every month.
But I'm emphasizing personal development investment because, at the end of the day, this type of investment is the values we would sell to people, organizations. It will yield us money that would enable us to invest in other investment options!
I hope we all know, people are always ready to pay for the good value they receive from us!
The value you bring to their organization and staff. Smiles, are we on the same page?
So, to answer that question.
I'll say we do these;
Know how much salary you earn or pocket the money you receive.
Properly budget the entire money on both consumption and investment! Budgeting would help cut out the unnecessary spending.
Finally, do well to stick to this budget! Do it consistently in 2020! And I can assure you that you would see return at the end of the day...
HOW CAN I MAXIMIZE MY INCOME?
So, how can we maximize our income?
Truthfully, this question is really for those that earn a salary, a stable monthly or once in two months allowance, or those that have side jobs that bring them income
For those not in this category,
The answer to this simply is; to maximize your income, properly budget any money you get at any point in time on consumption and personal development investment.
Go hard on investing in your personal development.
Take online courses, learn handwork, or something.
Please note that I'm not saying you should invest in options like stocks, agric-technology, etc. Because you would need a form of steady income to stay consistent in investing in these things! So you don't get stranded or broke in the name of wanting more money because you want to invest in stocks and so
So for those earning some kind of steady forms of income,
To maximize your income; after you've properly budgeted your income inflow on consumption and investment.
Investment here is the personal development investment because you'll need to learn some more to stay relevant. After all, the world keeps evolving. Lol… And the investment in real investment options like stocks, forex, etc.
You'll need to adopt a budgeting approach.
For our level, the 50:30:20 approaches are common.
Which means, spend 50% of your earning on your needs, 30% on your wants and 20% on the 2 forms of investment...
You can go higher though.
But don't get all stranded because you want to leave a portion aside on investment.
So, after adopting a budgeting approach that suits you.
I'd like to tackle one of the investment options that we will need at our level, which is mutual funds.
Because we have different investment options to suit different risks of individuals.
But I'm saying mutual funds because you have a guaranteed capital and returns.
You might wonder why investing in investment options like mutual funds and so are key…
Let me tell you why
Like we all know, take it or leave it, the state of Nigeria today isn't too good and our macroeconomic indicators are not favorable for us to be wasting our money in the bank that yields us only 2% returns annually.
We're going to why we need to invest in these real investment options!!
Mutual fund investment gives us is that it helps us to be able to maintain to some extent our consumption level given the high inflation rate.
So, what are mutual funds?
It's simply a pool of funds with low risk that enables us to earn returns...
It has a mix of treasury bills, bonds, and other Government securities.
And the returns on these types of investments are dependent on the asset managers you use.
So, to answer question 2 for those that earn a steady income.
Invest a bill! That is, choose to invest some part of your earnings.
HOW DO I CUT OFF UNNECESSARY SPENDING?
I already answered this…
Budget!
Some apps could also help you track your expenses.
Just click on the budget tracker on play store, you'd see a lot of them.
WHAT ARE THE FINANCIAL GOALS I NEED TO SET?
Make financial goals and review them at the end of every quarter.
Below are some examples of smart goals:
I want to have a 12-mon5g emergency fund.
I want to buy a plot of land/own real estate.
I want to increase my net-worth by 50%.
I want to pay off 100% of my debt.
Short term goals- Vacation, MBA funds.
I want to invest in assets that earn cash flow every year for 5 years.
If you stick to them, fine.
If you fail, look at what you did wrong and make amends.
You can get accountability partners to also help keep you in check.
I will come to the end of this article on this note.
OUR GOAL IS FINANCIAL INDEPENDENCE AND IT IS A PLAN, IF YOU'RE NOT DELIBERATE ABOUT IT, YOU WOULD NEVER TAKE ACTIONS.
Thanks for stopping by to read.
Please let me hear your opinions and contributions in the comment section.
Don’t forget to upvote, comment, and resteem.
I remain your brother.
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