Managing your personal finance is about increasing your capacity to earn so that you can save more. It is also about spending wisely and avoiding getting into debt so that you can make your money grow faster. When you need to borrow, you do so sensibly.
1. Maximize your earning power: Acquire the knowledge and equip the necessary skills which are in demand to boost your earning potential. IT is a hot subject and so is finance and accounting which are required in any business. Your technical skills are not enough to get ahead and be outstanding. Polish your soft skills so that people will like you and are more inclined to work with you. Like and enjoy what you do, the money will come.
2. Maximize savings: You will not spend much on essential items. When you earn more you should save more and not spending on what you want. Your savings serve many purposes:
· An emergency fund
· Down payment for a car
· Down payment for your house
· Big tickets item- buy in cash and save on interest
· Start early to save for retirement
3. Spend wisely: Look for durability and quality and not just the brands. Popular brands are more expensive because you are paying for their heavy advertising cost. Buy what you need and not what you want to impress others. As long as you have budgeted for savings as an “expense” item, you are doing fine. It means there are savings and you do not overspend and get into debt.
4. Grow your wealth: When you have accumulated your savings over time you should take out the money in the bank and make it work harder. You can leave your emergency fund in the bank. Invest in property, stocks, bonds mutual funds, and precious metals. Each investment vehicle has its own merits and you should diversify your portfolio to minimize financial risks. Look for long-term investment and not for quick gain. Do not be greedy. Slow and steady wins the race.
5. Borrow wisely: Most likely you will need to borrow to purchase a car and buy your dream house. When you have earmarked and saved a bigger amount of down payment for these two items, you will borrow less and pay less for your monthly installments and for a much shorter term.
Life is about earning your own way, save for a rainy day, live within your means, and be happy for many years to come.
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