For the rest of the month I will write 5 Articles on Financial Literacy
Financial literacy is a broad topic, everything from balancing a checkbook (does anyone actually do this now that mint.com exists?), developing a household budge and planning for retirement. Just like every activity in life the more you know the better you will be to handle money.
I will strive to post 1 topic per day for the rest of April to help you on your journey to financial literacy.
1. Get to Know Where You are Starting From
The best laid plans are designed from initial conditions. If you are a million dollars in debt right now it is an almost impossible feat to reach a positive $1 million net worth in a couple of years. Once you know where your starting position is you can begin to lay out plans for 1 year, 5 year, 10 year, etc. Every baby step you take will get you to your desired destination.
For personal finance you starting point is knowing your current Net Worth. Net worth is assets minus liabilities. In other words what you own verse what you owe. This number will give you a great idea of how financial secure you currently are and what resources you have to reach your financial goals.
The next article on Financial Literacy will go in more depth on calculation Net Worth. Some step by step calculations and some tips on building that bigger nest egg. Click Here
Many people get into financial trouble spending haphazardly on wants and forgetting to set aside savings then the end of the month comes and nothing is left or worse you spent more on the credit card than your paycheck.
2. Priorities and Goals
Set financial priorities with a list of needs and wants. Basic needs: food, shelter, clothing, healthcare and transportation. Wants can be anything that is not necessary to your survival such as game systems, vacations, luxury cars. Only you can decide what is a need and what is a want starting making your list.
The goal here is to use your paycheck to pay for needs then pay yourself through savings and investment and finally if anything is left over pay for your most important wants. The wants list will always grow as we humans strive to better our existence. This is why you prioritize wants and check them off the list as your income and wealth grow.
This week I will write a Financial Wellness article that offers advice on how to prioritize and achieve financial goals. Click Here
3. Know your Spending
I am sure you know the exact dollar amount of your tax home pay each period and an estimate for the year. However do you know how much you spend on restaurants, food, auto, etc. or where that last $20 bill in your wallet went. This is where a personal spending plan is so important. To gain financial ground you must know your cash flow. Positive cash flow at the end of the month is a great thing where you can pay down debt faster or save more for that big ticket item. If you only focus on the cash coming in you would have no idea what is left other or where you are potential wasting money on things that aren't making you that much happier.
Build a budget today and crush the superfluous goods and services. Click Here
4. Destroy your Debt
Modern life is a story of debt. Most have mortgage debt, auto loans, credit cards, medical bills, student loans and possibly a personal loan or line of credit. Debt is so attractive because it allows us to fill current spending today when it could take years to save up enough to buy that luxury item. However as you know it is not free or cheap. Credit cards are some of the most expensive debt instruments to use with rates ranging from 10% to 35%+, this interest adds up quickly. Even "low" mortgage rate of 4% is costly at the end of 30 years where the interest paid over time is equal to the original mortgage principal. Each debt payment adds weight to a potential disastrous financial future.
The best solution is to avoid debt in the first place. Easy to say and hard to implement. There are strategies you can use to pay down debt more efficiently and hopefully get to the point where you don't need much of it at all. The next article is Dig Your Way out of Debt. Click Here
5. A Secure Financial Future
The most successful people have a positive attitude and optimistic outlook. Instead of saying "I'll never retire." or "I'll never do this or that." Image where you want to be and make a plan to get there.
Your financial future demands that you learn about retirement options and long term savings goals. Have a plan for where you want to be in life and if you truly want it then you will take the appropriate action steps to get achieve this dream.
Next article is investing for the future Retirement and everything in between. Click Here
The Bottom Line
Congratulations on reading this article you are taking a proactive step to a better financial future. You will thank yourself decades from now for taking these first steps.
Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.
Posted from my blog with SteemPress : https://sweerch.com/2020/04/24/april-is-financial-literacy-month/