By Matata Mercy
A few months ago, a close relative of mine lost his job and that is when hell broke lose and everything was exposed.
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| Imagecredit: Finances. |
It turns out that this relative of mine did not have any savings to his name after working for decades.
With my thoughts telling me that personal finance is now common knowledge with the coming of the internet and other digital technologies, I thought that could not happen to some one who has at least seen some classroom walls but my judgements were wrong.
This is reality happening not only to my close relative but am sure many people around the world who are either deeply in debt or just hanging on their paychecks day by day and month by month.
Yet personal finance is something that has been drummed into our ears for years and years. The motto at least when I was a kid was save, save and save.
Today I would like to share with you some of the fundamental truths about personal finance that will help you to get the stress about money out of your life.
I know you have heard about all this countless times but since we are all humans we always need some reminders in our lives to keep us awake about the paths that we are taking in life.
Without much ado, I will share with you the universal truths about how to handle our finances:-
1. Always spend less than you earn.
This is one of the oldest truths about money that we have heard about since childhood, spend less than you earn so it goes.
There is no one on this earth who is financially okay who always spends all that he earns or even more than what he earns.
One way you can spend less than you earn is to ensure that you are only buying the things that you need. And also the things that you are going to make use of.
That is where the idea of minimalism comes in,it helps to buy only the things that you need hence enabling you to save more money and live below your means.
For example, why buy more pairs of jeans when you already have 10 other pairs of jeans hanging off inside your wardrobe?
2.Ensure that you save consistently.
It does not matter how much you earn, ensure that you save a small portion of your income on a monthly basis if possible.
Saving consistently is a habit that can be built if you truly desire to get out of poverty and the financial stress that many people find themselves in.
Start small and keep doing it consistently, you can even start by saving just one dollar per week and increase the amount as time goes on.
One book I read that taught me about saving is called The richest man in Babylon written by a man called George Claysson.
According to the book, one must save at least 10 percent of their income consistently if they are to become financially independent.
My recommendation is that save at least 10 percent of your income.
Ensure that that money is kept safe in an account that you cannot easily access. Just allow it to grow with time and using the power of compounding.
3.Avoid using credit cards as much as possible.
The habit of using credit cards is very dangerous since the cards cannot easily set up an alarm for you. Before you know it, you have spent thousands of dollars.
And the worst thing about credit cards is that it encourages you to eat into your future.
You consume today what you are supposed to have tomorrow. This basically means that you will ultimately be stuck in debt.
When you are in debt, it is very difficult to get out of poverty and achieve financial freedom.
The best advice I can give a credit card addict is to destroy those cards and use cash to buy the things you need.
When you spend a lot of cash, an alarm will be set in your mind about wasting money and you will spend less and save more.
4.Diversify your investments.
One of the best ways to ensure that you are always financially okay is to diversify your investments.
You can do this by investing in different sectors like by buying shares in different companies, buying Treasury bills and bonds or even investing in other businesses like restaurants, saloons and even real estate.
When you diversify your investments, it will protect you from devastating losses.
If you make losses in one sector, the gains in other sectors will still put money into your pocket.
I hope these tips will help you to stay financially upright. Good luck.
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