Below are a few pointers on how to start your journey to financial literacy and finally financial freedom
Identify a starting Point
For a start, calculate your net worth to gauge your current financial health and progress over time.
Net worth is the difference between your current assets and current liabilities.
This will determine if you are doing well or you are off track in terms of your current financial situation
Set your priorities
Create a list of needs and wants that will help you set your financial priorities.
Rank your needs and wants clearly to define where your money should go first.
This will also help you identify areas where you may be losing money without realizing it
Document your spending
Have a personal budget to know what comes in and what goes out. This will help you meet your current and future financial obligations.
It will also help you track your financial performance over time.
A budget will also help you in determining the expense that has gone overboard and thus making you make informed decisions in terms of spending.
Pay down your debt
Debt can be considered a good debt if it helps you build your wealth. Bad Debt is considered if you are borrowing money to buy a depreciating asset.
To reduce your debts, first understand your debts, have a repayment strategy, increase repayments and reduce expenses to reduce your repayment period thus also reducing the debt costs.
Secure your financial future
Have a solid retirement plan by determining your retirement income goals and what is needed to be done now in order to achieve those goals.
Identify income sources, cut on expenses that you can do without, have a saving plan.
The earlier you implement a retirement plan the better
Article By Lucy Ngure