PERSONAL FINANCE: Top Ten Financial Tips We All Need

Although making resolutions to improve your financial situation is a good thing to do at any time of year, many people find it easier at the beginning of a new year. Regardless of when you begin, the basics remain the same. Here are some top ten keys to getting ahead financially;

1. Get Paid What You're Worth and Spend Less Than You Earn
It sounds simplistic, but many people struggle with this first basic rule. Make sure you know what your job is worth in the marketplace, by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company, for what you do. Being underpaid even a thousand dollars a year can have a significant cumulative effect over the course of your working life.
No matter how much or how little you're paid, you'll never get ahead if you spend more than you earn. Often it's easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. It doesn't always have to involve making big sacrifices.

2. Stick to a Budget
One of my favorite subjects: budgeting. It's not a four-letter word. How can you know where your money is going if you don't budget? How can you set spending and saving goals if you don't know where your money is going? You need a budget whether you make thousands or hundreds of thousands of Naira a year.

3. Debit Card
Debit cards are the number one obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it's so easy to forget that it's real money we're dealing with when we whip them out to pay for a purchase, large or small.

4. Contribute to a Retirement Plan
If your employer has a retirement plan and you don't contribute to it, you're walking away from one of the best deals out there. Ask your employer if they have a plan and sign up today. If you're already contributing, try to increase your contribution. If your employer doesn't offer a retirement plan, consider an IRA (Individual Retirement Account).

5. Have a Savings Plan
You've heard it before: Pay yourself first! If you wait until you've met all your other financial obligations before seeing what's left over for saving, chances are you'll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted(STANDING ORDER) from your salary account and deposited into a separate account.

6. Invest!
If you're contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better for you talk to your Broker today.

7. Maximize Your Employment Benefits
Employment benefits like a retirement plan, flexible spending accounts and medical insurance, etc., are worth big bucks. Make sure you're maximizing yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.

8. Review Your Insurance Coverages
Too many people are talked into paying too much for life and disability insurance, whether it's by adding these coverages to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents. On the other hand, it's important that you have enough insurance to protect your dependents and your income in the case of death or disability.

9. Update Your Will
Majority of Nigerians don't have a will. If you have dependents, no matter how little or how much you own, you need a will. Protect your loved ones. Write a will.

10. Keep Good Records
If you don't keep good records. Set up a system now and use it all year. It's much easier than scrambling to find everything , only to miss items that might have saved you money.

How are you doing on the top ten list? If you're not doing at least six of the ten, resolve to make improvements. Choose one area at a time and set a goal for incorporating all ten into your lifestyle.

"The right time to invest is always." Bruce Berkowitz

 I would love to read your suggestions or feedback's on this topic. Please leave a comment thank you.

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PERSONAL FINANCE: Planning your income

Studies have shown that the average worker can become a millionaire in his or her lifetime with sound financial planning but despite earning so much during their illustrious career people seldom achieve financial independence. This is not due to lack of income but the lack of knowledge to plan their finances.

WHY you should plan?

A good financial plan helps you and your family prepare for the unexpected, such as illness, loss of job, or even death.

HOW to be financially independent?

Planning your finances or income starts with assessing your financial situation up to determining your objectives and designing your financial plans to achieve them.

According to experts you can break your finances into seven key areas namely: Income, Savings, Retirement, and Tax, Expenses, Estate and investments. Note that each of these areas should have a target and a plan to achieve them.

To set yourself free from financial pressure and take control of your life, I suggest we put our income on a scale of 100% , where 10% of our income should go into tithes, 20% of our income should go into capital investments (i.e purchase of properties, land etc.) Those assets that are fixed assets should take 20% of our income.

The next 20% should go into floating assets: buying of stocks of blue chip companies where you get dividends or you trade on the shares when they appreciate. Other examples of floating assets are bonds, treasury bills etc.

The next 25% should go into Emergency cash: this is cash in your bank accounts. You should never touch it as this will reduce your blood pressure when the unexpected happens.

The last 25% should be on waste assets: these include clothes, transportation, feeding, shoes, cars, rent etc. this is the only part of your income to service yourself.

QUESTIONS to ponder on?

Assuming you earn 2 million naira a year, at the end of the year, do you have up to N500k in your emergency cash account? Do you have up to N400k in fixed asset such as land or did you invest up to that amount on your building project or do you have up to that amount worth of shares in blue chip companies?

If you do not have the aforementioned, then it means that you have spent the whole 2million naira per annum income on waste; buying cars, clothes, shoes, traveling abroad on vacation etc.

I am not saying you should not enjoy yourself but when you spend the whole or major part of your income servicing yourself, what happens to you and your family when you lose your job?

Hence my advice to some of us that spend all we earn is to build a comfort zone by putting most of our income in cash at bank, fixed assets and stocks.

In conclusion I will like you to know that it is imperative for us to dedicate time out in planning our financial destiny as this is a key to our financial independence. 

"If you know how to spend less than you get, you have the philosopher’s stone". Benjamin Franklin

 I would love to read your suggestions or feedback's on this topic. Please leave a comment thank you.

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