If you ask 10 persons on the street today how they want their personal finance life to be, am sure almost all of them will tell you they want to get rich and live a wealthy life.
Getting rich or living at the comfort of being able to buy anything you or take any vocation you want comes with adequate planning to financial freedom.
This is why personal finance is taught both at home and modern schools today.
Understanding how to take control of our personal finances will largely affect every other areas of our life.
No matter how you feel about life, if you don’t take control of your personal finance, there are chances you’ll always end up in terrible financial crises and bad debts.
Therefore, in this article let us discuss 7 proven financial finance tips needed to achieve financial freedom.
1. Your personal finance growth should start by knowing your inflow and outflow of cash:
The first step to take charge of your personal finance is knowing what you get and what leaves you daily, weekly or monthly.
You must keep an exact record to know how much you make and how much you spend over a period of time.
If you don’t know how much comes into your wallet and how much goes out, how exactly will you be able to budget, save money, invest or grow your income?
Therefore, knowing your inflow and outflow of money is the very first step.
2. Engage in personal budgeting:
Never play down on budgeting. Create weekly, monthly or quarterly budgets for your expenses.
This way you will be able to control impulsive spending that jeopardizes your financial goal.
Well, it is true that some expenses come unexpected, however with good budgeting in place you can easily make room for emergency expenses.
This is one undisputable advantage of budgeting.
Also read: Why do you need family budget in 2022.
3. Use of monthly savings and investment:
Cultivate the habit of saving some percent of your money, you can’t spend all you earn.
For example, weekly transfer of funds to a mutual fund savings account will help in maximizing your way to financial freedom.
There is no doubt that everyone desires to make their money work for them.
This is why people are also looking for where to invest their long-term saved money.
However, a good knowledge of investing is require to become a successful investor as the likes of Warren Buffett.
Also, the type of investment people embark on largely depends on their risk tolerance and business knowledge.
Further more, cut down your expenses and carry out periodic cost optimization to enable you pay attention to your priorities.
4. Understand how depreciation, depletion and amortization works:
There are some expenses that don’t occur monthly which includes cost of house rents and utility bills.
Such expenses should be planed and spread across your budget in spans of weeks and months.
Personal finance becomes hard when you do not know the right assets to buy even after you have been able to save and invest your money.
Hence, buy assets that appreciates in value instead of depreciating assets.
5. Grow your income channel:
Get multiple streams of income as one source of income might not be enough to give you that financial freedom you desire.
According to Robert Kiyosaki, “When it comes to money, the only skill most people know is to work hard.”
However, this doesn’t play down on the place of hard work but working smart should be the major goal.
As you make the money always remember to re-invest your earnings into real profitable businesses that yields very good return on investment (ROI).
6. Building your personal finance involves inventing a working system:
It’s not enough to do everything listed above, try to build a system that is capable of working for you.
The route to personal finance is all about wealth creation.
This implies producing more value and consuming less resources.
The only way to create wealth is to build a system that does the job for you.
In other words, this means you should work towards making money in your sleep.
Warren Buffett once said if you don’t find a way to make money in your sleep, you’ll work until you die.
7. Discipline your personal finance life:
Discipline in this context involves avoiding greed and all forms of Ponzi schemes that promises you 1000% profits in 7days.
If discipline is not in place then every other efforts made in all the six steps we listed above will be in vain.
As a rule, before you purchase any item, use what I call the 10X rule.
This implies being able to afford 10X any item you intend to buy when going for shopping.
Discipline your taste for luxuries and only take vocations within your budget.
The bottom-line is to add some percentage discipline to every stage of your personal finance life and you’re sure to get to the top.
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