Every year we have our hopes and dreams. Each year brings new energy. Each person’s expectation is like a cycle. Everyone wants to succeed. Here are 25 steps you can take to improve your personal finances this year.
1. REVIEW THE PERIOD: It is important to review the previous year. Research shows that only 10% of those who make financial resolutions every year actually keep them. Is it not troubling that your resolutions for last year were also broken? Why not make a new year every year and start again? Get a pen and paper and take a look at your financial activities over the past year. This includes everything from income to spending. You will be able to see why certain financial goals didn’t materialize. You might find that your total expenses exceed your income.
Simple Guide: Make a ledger for credit and debit. All income, regardless of how small, should be credited to the credit side and all expenditures to the debit side. Add each side together. Do you still wonder why your financial goals were not realized in the last year because your debit exceeds 30% of your credit?
2. CREATE A CHECKLIST FOR ALL YOUR FINANCIAL MATTERS. The second step is to make a list of all your financial issues, with ‘Emergency” as the last. You need to be prepared for any emergency situation that may arise.
This checklist can be created by breaking down each financial issue into months. Many people believe that they know everything and go through the entire year believing this false belief. They fail more often because humans are vulnerable to memory loss. Instead, you can make a list and see a change in your motivation every time you look at it. You can also use tools like PocketGuard or Spendee to help you accomplish this.
3. SET SPECIFIC FUNDANCIAL GOALS: Once you have created the checklist, it is time to create your financial goals with specific dates. This is when your goals become realistic. The dates serve as deadlines, putting you under great pressure to achieve them. A goal is nothing without a date. It is merely wishful thinking. Unfortunately, many people do this.
Specific does not mean that you will earn a million naira by August 2018. You can be more specific about the date. Instead, you could say “August 30, 2018”, for example. It becomes a goal you can chase every morning.
4. KEEP A FAIR BUDGET: Many people are not faithful to their budget. This is a sign of indifference. You can learn to budget and stick to it. This will allow you to meet your financial obligations and plans. You will end up in debt and miserable if you go over your budget. There are amazing digital tools like Wallet and Personal Capital which allow you to plan your budget and keep it in a simple format. PocketGuard, for example, can alert you if you’re spending more than you budget. These tools can help you live a better life. You must not budget with your head.
5. STOP SPARING WHAT YOU HAVE FINANCED: This rule is your guideline. Save at least 10% for every dollar you earn. This is where the problem lies: Many people don’t have the discipline to do this. This is possible by seperating your personal finances from your business income.
6. LEVERAGE ON GOOD DEBTS and AVOID BAD DEATS: Everyone should love debt. This is the principle that the richest people in the world live by. They love good debt and hate bad debt. If managed well, good debt can bring you more cash flow. Bad debt, on the other side, can cause you to feel miserable, place unnecessary pressure on your finances, and make it difficult for you to live comfortably. Avoid bad debts if you want to improve your personal finances in 2018.
Good debts are those that are used to fulfill financial obligations such as the purchase of stocks, real estate, or investment. These are important investments that can increase your financial independence and compound your financial goals. Bad debts can be used to purchase non-essential luxury items such as cars, holidays and the best proposal dinner. These luxuries don’t compound wealth. They take away what you already own. Choose the one that you prefer.
7. PAY OFF YOUR SMALLER CREDIT FIRST: You must already be thinking, “But I am in debt already.” My debtors are breathing down mine neck’. All good and well. It is important to make it a priority to eliminate bad debts. Make a list of all your bad debts, listing them in order of size. Next, settle the smaller debts. Before moving on to the next, any debt that has been fully paid should be cancelled.
This logic is straightforward. It is easier to pay off smaller debts. The more you can cancel each debt, the easier it will be to pay off the larger ones. With this confidence comes the desire to stop racking up debts each year. This means you will become a better financial manager.
8. LIVE YOUR MEANS: This is a bizarre idea. Many people have advocated that people should live below what they can afford to save money. Actually, I believe that people should live within their means. You should consider buying a business if you have the means to do so. Convenience is the key to living within your means.
You must honestly tell yourself about your financial situation in order to measure your ability to take on situations. A 100, 000.00 Naira monthly wage might make it possible to live in a small apartment. To determine how much money you have left to support the lifestyle you desire, you should calculate the monthly food, clothing, and welfare expenses.
One rule that I recommend is simple: If your personal financial goals exceed 10% of your actual income then you may be happier living below your means.
9. AVOID ENTITLEMENT MINDSET: Nobody owes you anything as a major. Don’t be lazy. As in personal finance and business, you are responsible for all your decisions. This will make it easier to be motivated to make smart financial decisions once you have made this a habit. The act of taking ownership will become second nature to you. Entrepreneurs who are successful don’t wait for the goodwill of their family or friends. They persevere through the failures until they achieve their goal. They work harder to maintain their success. That mindset should be yours.
10. AVOID THE LLOTTERY: Although this might not be a popular choice for some lottery fans, if you aren’t in control of your finances then it is best to stay away from the lottery. I answer this question by saying that lottery is a business of luck. It’s based on accurate punditry and guessing about a situation. In the hope of hitting the jackpot, you spend money all the time. What if you don’t win? Let’s even assume that you win. Did you take a look at how much you contributed to the lottery over the years, and what your winnings are? Some people will be lucky enough to win the lottery. But, the vast majority of people will not be able to do so. Wealthiest people understand that waiting for big luck from the heavens is not a way to grasp the concept of luck. Because luck is an intentional effort by an individual, they diversify their portfolios before entering the lottery.
11. OPERATE 3 DESIGNATED BANCK ACCOUNTS. This is because we often draw from one bank account to solve our financial problems. This is a dangerous practice that can lead to financial planning failures and leave people feeling drained.
You should have three bank accounts that you can save in different periods if you want to secure your financial future. The first account should be used for savings. This could also be your salary account. The second account is for emergencies and the third for philanthropy. Because you are working with a budget, it is easy to know which account you should use for each occasion. Discipline will also prevent you from touching other accounts when there is no reason to.
This strategy is supported by Robert Kiyosaki, a finance expert. It is also something I endorse.
12. TAKE A CHECK OF YOUR NET WORTH ALWAYS. Do you know what your net worth is? Many people feel secure, but this is a problem. People believe they are worth more than what is actually true. People who are in control of their finances will make it a habit to keep track of their net worth. Stop bragging about your assets. To get a better idea of your true worth, subtract your liabilities from these assets. What you really are worth is the sum of your liabilities and assets.
13. DIFFERENTIATE YOUR INVESTMENT HOLDING. Diversifying your portfolio will reduce investment risk. Smart working means that your risks are spread across different sectors. Your investments in other sectors will mitigate the effects of any sector failures. Diversification is important for many reasons. For example, loss of business, inflation and taxation as well as political instability.
14. CREATE PASSIVE OUTCOME: This is the key to financial freedom. You must engage in activities that produce more income to build passive wealth. You can boost your personal finances this year by engaging in income-generating activities even if you’re not working. You can leverage technology to invest in legitimate network marketing programs and online businesses. Your income will increase.
15. LEARN THE RULES FOR INVESTING. Just because you are looking to create passive income and diversify your portfolio, does not mean that you should ignore the rules for investing. The first rule in investing is to never invest in something you don’t know. Before you invest your hard-earned cash, make sure you have the right knowledge. Second, you shouldn’t invest money that you can’t afford to lose. You should have liquid cash in case you lose your investment.
You should also be familiar with the principles of compound interest and the legal framework for what you invest in.
16. ENGAGE IN YOUR PASSION, HAVE FUN! Some people feel miserable because they don’t do what they love. Many people are forced to work in negative jobs just to make a living. Passionate and passionate about your work is essential to achieve greatness in life. It is a joy to provide financial and business solutions for people who require them. It brings me joy.
Find passion for what you do. This is how you can have fun, and live life to its fullest. You can make poor financial decisions if you don’t love what you do.
Here’s a tip: If you don’t like what you do, take the time to invest in the things you love. Then move on.
17. EXERCISE TO KEEP YOU FIT AND ENERGIZED: People who work long hours are often tired and irritable. Physical exercise can keep your mind alert and your body fit for any kind of physical activity.
18. AFFORDABLE HEALTH: Your health is the most important thing in your life. Your health is your greatest asset. You should not neglect your health. I’ve seen people who don’t care about their health and are careless with what they eat. Sluggishness is something I dislike.
19. Be flexible and always adjust: Everyone wants to appear in control, to have planned ahead and to be in control of their finances. Changes will happen along the way, some beyond our control. People who adapt to changing trends are the ones who have the greatest control over their finances. They are flexible in their outlook on life. Being rigid can lead to being closed to new ideas and possibilities. Your personal view of the world and your own way of doing things may be what’s limiting you. One trait is common to the most successful CEOs and entrepreneurs. They employ the most intelligent people to bring innovative ideas to the table. This is how businesses thrive. This is how personal financial wealth grows. You may need to follow your conviction at times, but ensure you consider all factors.
20. WORK SIMPLE: Did you know that someone else works fewer hours and makes far more than you while you work your 9-5 job? Working smart is the rule of 21st century. Although I hate laziness and can’t encourage it, hard work should be integrated with working smart. You can think of innovative ways to engage the public and generate more income. Are you a popular social media user? This is a great opportunity to promote your passion. You should create a reasonable amount of awareness. You can increase the number of people who need your services by creating awareness. It doesn’t take long for the big bucks to come your way to rent the best office space. Make the most of technology and use what you already have.
21. LEVERAGE ON TECHNOLOGY & AUTOMATE SAVINGS. This is the age where everything is digital. It is impossible to continue living an analog lifestyle. You need to become familiar with all the technologies available that will help you improve your personal finances this year. You don’t need to carry cash when you can do banking transactions from your phone. Automate your spending and savings so you don’t go over your budget. PocketGuard allows you to do this.
22. GET INVOLVED in PHILANTHROPY. I believe that giving is a more effective way to receive. Helping others to become better is a way to find fulfillment. Philanthropy does not mean giving alms to the poor. It’s about doing little things that improve the lives of others. It is possible to volunteer in the community, provide pro bono services for those who really need it, and so forth.
You can help a startup survive if you’ve received excellent service. These little acts can have a big impact on your personal finances. You will be perceived as someone who is trustworthy and whose recommendations are genuine. This can only be good news for your business.
23. A RETIREMENT PLANNING PLAN: Many people believe that retirement means working for many years in the civil services and then retiring to a life with a pension. Retirement means planning for a life with less stress, but not stopping work. You can’t work forever, even if you have a chain of businesses. While you are the overseer, it is important to let go of your role and allow younger, more dynamic leaders to take over. What are your retirement plans? Are you covered by insurance? What about a retirement savings account? Are you investing your money in different portfolios that will produce income for years?
Are you a stockholder or a shareholder? And, more importantly, are you a real estate investor? Did you take the time to research about government policies in your country, and even look at financial incentives like the sukuk bonds from Nigeria? To determine if it is worth taking the risk?
Lack of planning can lead to people going broke in retirement. Do not wait for a pittance called a pension from the government before you can live. If you don’t want to be completely dependent on others for survival, this is a life of misery.
24. MENTOR: I strongly believe in the power and potential of imagery. Only after you have created images in your head can you think of an idea. Mentorship is exactly what you need. You have been beaten in the past in any financial race. Make a mentor of this person. You can learn from their successes and failures to help you get there faster than they did. Ask the right questions and receive answers. If you can avoid making mistakes, it is worth asking for help. It is important to learn how to approach things from a comfortable place.
25. START NOW. IT’S NEVER TOO TIME: It is never too late for you to begin planning for financial independence. It is possible to put in the work now and reap the rewards later. It is dangerous to not start.
Tip: Take a look at your financial performance over the past year.