September 2020 - Mayowa Oluyede Archive

6 Habits That Will Help Your Personal Finances

Money management is a touchy subject to discuss, as most people can’t account for their spending or earning habits properly. Not everyone fully understands that personal finance management helps to create wealth. Therefore, in this article, I will discuss tips on managing money effectively.

1. Always have a budget:

The first step to proper personal finance management is creating a budget using a scale of preference i.e. a list of the items you need to purchase or debts you need to pay off in order of importance. Creating a budget might seem a little hard, but it helps with keeping track of income and expenses and this is very important to managing funds effectively.

2. Keep track of your expenses:

Expenses refer to the costs spent on items or services. Many people can’t recount how much they spend monthly. Tracking expenses are as easy as; keeping receipts of items bought, going through bank statements and adding up all your credit. This helps to know how to manage your expenses and tracking financial health

3. Keep track of your income:

Total monthly expenses subtracted from total monthly income. If you end up with a negative value, this means you are spending more than you make. Reduce your spending habits until it leaves you with a total value of zero.

If you end up with a positive value, you are right on track and you are spending less than you make. You can then increase your savings or pay off outstanding debts. Having a clear understanding of your expenses and income is a significant step to managing your money right.

4. Pay off your debts:

Pay off debts with high interest rates first. Keep up with the required payments. Also, commit to paying off your mortgage as soon as you can.

5. Save for emergencies:

Be prepared, just as the boys’ scout motto says. It’s ideal to prepare some money for emergency occurrences. You shouldn’t touch or spend out of your emergency fund. Emergency funds serve a good purpose if you lose your job, your roof leaks, or your car breaks down. I once heard from a financial expert that our emergency funds should at least be able to cover our 6 months expense.

Save and Invest

Cultivate the habit of putting away a certain amount of money daily, weekly, or monthly. Have a savings target because this usually helps you work towards your goals. And when you hit your savings target?

Invest. There’s no other way to multiply your money than to invest in properties, invest in the capital market, and invest yourself.

Knowing and cultivating these habits will not only help you manage your money, it will improve your life.

Would you like a free 30 mins call with me?

I hope you have learned one or two things from this piece. Last, I mentor people to help them create wealth and become financially independent through investing in properties, and the capital market (Forex trading).

Would you like to get a free 30 mins to get on a call with me to discuss ways to attain financial independence?

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Stages to Financial independence and How to Reach it.

It is an irony of life that everyone desires financial independence, but not everyone will attain it. Not because it is an impossibility, but mostly because not everyone will do what it takes to achieve financial abundance.

Financial independence or financial freedom means different things to different people, yet we can all agree that it means having enough money to pay your living expenses for the rest of your life without having to work full time, and still have enough saved that an emergency won’t be devastating.

Many people achieve financial independence through saving and investing over the years, while others build successful businesses that generate income even while they sleep. There are many ways to reach financial independence, no matter where you are today.

In this piece, I want us to look at some wealth-generating habits that can help you become financially free, but first, let’s look at the stages of financial independence.

Stages of Financial independence

Stage 1: Financially Dependent

This is where most of us start out. At this stage, you are totally depending on another person or a menial job to survive. A financially dependent person has a lot of expenses, but little or no income at all. To leave this stage, the person needs to first get a good job, and then study up on personal finance.

Stage 2: Financial Novice

Here is the stage where you’ve just started earning, but you still aren’t in control of your expenses, maybe because you’ve been racking up some debt or your expenses still exceed your income.

To leave this stage, you need to be more frugal, avoid debt, reduce your expenses, and seek additional income sources.

Stage 3: Financially Precarious

This is the stage where you have stopped accumulating debt, your expenses have reduced, and you’re building up your emergency funds. At this point, you are much better financially than you used to be, but you can still progress. To upgrade from here, you need to pay off your debt and build an emergency fund that can cover 6 months of expenses.

Stage 4: Financially Balanced

In this phase, you experience some financial stability. Your emergency fund would have been well established and in this phase debt management is under control. However, there is still room for improvement here too. So, to turn things up higher, you will need to invest.

Stage 5: Financial Progress

This phase is much closer to financial independence, it is where you invest. Here, should an emergency or an unfortunate situation like job loss or a crisis like the COVID-19 occur, it would not cause financial ruin because you have investments to ride out a financial storm for multiple months. To step up from here, you need to build a portfolio of passive investment with a focus on investment income.

Stage 6: Financial Independence

Freedom at last. This phase is where your basic living needs and other expenses are covered by cash flow from your investments like rental income, rents, dividends, interest, and so on. At this stage, your investment income is much more than your expenses and now you can buy anything you want, travel anywhere, and upgrade your lifestyle on your own terms–without ever worrying about breaking the bank.

This is the stage that we all should strive to get to, the level of financial abundance where you have a surplus–an abundance of cash flow whereby you can be more philanthropic to causes or events that contribute positively to the lives of others.

There are many ways to reach financial independence, and it’s not just for the wealthy.

Some habits that can make you financially independent.

Avoid debt as much as you can, especially consumer debt.
Ignore the Joneses (those are the friends and family you love to prove to of your status), ignore them, and focus on building your finances instead.
Cut down on your expenses, spend less than you earn.
Learn to budget your finances and always save first.
Buy assets.
Invest now and keep investing.

That said, I hope you have learned one or two things from this piece. Last, I mentor people to help them create wealth and become financially independent through investing in properties, and the capital market (Forex trading).