Encouraging financial awareness; In an effort to help individuals to make sound financial decisions, Whether you are beginning your professional career, an entrepreneur, a trader, employee or nearing retirement, the financial literacy series will provide you with the tools and resources you need to make informed decisions regarding your financial well-being now and in the future.
The first principle is to know how much you spend in a day, a week and a month (your spending patterns) and much that to your income, salary or profit you make in a month. This would set the path to starting a sound financial life.
Secondly, take your savings percentage out of your salary, income or profit first before you start to spend what is left, ie pay yourself first before you start your spending.
The third principle is to stay disciplined, be aware of your circumstance, spending and lifestyle and make a commitment to start saving now.it is advisable to sacrifice some of your preference, taste and your wants in other to start savings.
Reduce your debt to income or salary ratio.it is very important to cut down on your debts (make sure you do not spend more than half of your income on paying interest on loans or debts).keep out of excessive debts
Be patient in your purchase and do not rush or do impulse buying. Mostly the things you rush to buy are things you would realize later that you do not really need them.be very conservative and smart.
Principles for savings and Investment
- Seek financial knowledge as it is a catalyst for understanding personal finance and how best you can invest your savings for a guaranteed financial life.
- It is important to invest your saving with a level of risk tolerance. Make sure that you consider a margin of safety for your investment.
- Margin of safety simply means you should not only be so interested in the high possible return on the investment but also very importantly paying a keen attention to minimizing the risk on the downside of the investment for a fair balance.
- Invest in what you know when you can and when you want to try something new, take the time to learn a lot about it first.
- Learn more about companies that offer higher returns on their investment products. They may provide a high return, but that’s only if their strategy plays out well, which is why investors have to pay close attention to the companies that promise higher yields.
©Jerry.J.AFOLABI is a financial & Economic expert who believes that ordinary people can do extraordinary things when given opportunity.
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