Wednesday, March 30, 2011

Are You Financially Successful?

Personal finance

Financial success is a measurement of your personal finance management skills and not a yardstick of your wealth. How you manage your wealth is more important than how wealthy you are. It is because your fortune can be wiped out by a single bad habit such as gambling. Find out how good you are in managing your money:

1.                  Habit for Savings: You have this habit since young. You have got used to the habit of saving what is left over instead of spending it all. Regular savings and compound interest work hand in hand to accumulate a substantial amount over time.

2.                  Control the urge to get more wants on credit: Live according to your means and not to compete with others. Who cares what you have got? The only thing is that you have debt to worry about.   

3.                  Credit worthiness: When you need to get a personal loan, a guarantor is not required.  You can be trusted by financial institutions that you are unlikely to default loan repayments. One indication of your credit worthiness is your prompt payment of credit card bills.

4.                  Debt free: It is usually about your credit card debts. More often than not, you have incurred these extra expenses and things you want and not what you need. You are debt free because you are in control.

5.                  Effective budget: You plan your budget and you work your budget and there is surplus fund every month to match what you have budgeted.

6.                  There is fund for emergency purposes: There is no need to look for fund outside. You are ready to meet urgent medical expenses or unexpected outlays.  

7.                  You have started saving for your children’s tertiary education and your retirement: You have started early to save because you know only a small amount is required. 

8.                  When you retire you have fully settled your housing loan: You enjoy financial independence during your retirement because you are debt free and you have built various passive income streams to support your living standard.

9.                   Your net worth is growing: Every year when you compile your net worth sheet you note that the amount is growing. It means you are richer than before.

10.      No bad habits: Gambling, smoking and excessive drinking are not what you like. You live a prudent and healthy lifestyle.

11.      Invest wisely: You do not believe in quick gain. You understand solid investment is for the long term. You investigate thoroughly before you part with your hard-earned money.

12.      Adequate insurance coverageYou do not leave things to chance. You take up insurance coverage to meet unexpected expenses due to accidents or critical illnesses. Your properties are also insured against perils such ad fire and flood.

13.      Manage wisely when you are no longer around: You know it is not too early to draw a will for the proper distribution of your wealth to love ones in a hassle- free way. When you are not there, they will not encounter financial difficulties.

I came to realize that my money problems, worries, and shortages largely began and ended with the person in my mirror. I realized also that if I could learn to manage the character I shaved with every morning, I would win with money.
~ Dave Ramsey

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