Like it or not, financial management enables you plan ahead for a better and more comfortable future. Whether you’re a worker or self employed, most of your goals in life can only be achieved with the help of responsible and effective planning. It is important to have solid financial plans. These plans, if well adapted will help sustain yourself and loved ones.
It is definitely not wise to neglect the significance of financial management at any situation. Most especially with the times we’re facing in our dear country, Nigeria. With proper financial planning you have a base on which you can build your personal wealth. We bet you’re ready to start building yours; see below 3 reasons why you need to start taking financial management seriously :
To create wealth.
Start with a clear plan; set your financial goals and also show a clear path to their attainment. To create wealth you need to be generating income, some people generate income and still end up broke. With wealth generation, comes the need to know the basics of wealth management. Choose an income generation avenue that works well for you. If you like to sew dresses, design websites for businesses, offer personalised services or whatever it is you like.
There’s a saying – ‘The ocean never dries up because water comes in from different sources’. Think of this quote as enlightening you to the possibilities of multiple streams of income to grow your financial capacity. As you begin to receive more income, savings should be a top priority. It does not matter, whether you are an entrepreneur or office worker. At the end, it is the savings you’ve been able to gather from your total income that sets you towards the path of wealth. This same principle works for companies and even for countries. The more you’re able to keep costs and spending low and savings on a high, you’re well on your way towards a wealthier future.
Asides from savings, you can create wealth from a number of investment options like stocks, shares, partnerships, trust funds etc. To ensure that this wealth you’re building doesn’t just fall into undeserving hands irrespective of what happens to you, you need to state your wishes and structure your finances in a way that will be accessed peacefully by your loved ones, should the unexpected happen. You can do this through estate planning.
The important thing in creating wealth is to have a strategy or plan that carefully addresses the above mentioned and still allows you to build a financial fortress.
To learn more about cash flow and budgeting
Your knowledge here doesn’t even have to be great. All you need to know how to do is the basics. Be able to work out how much money comes to you on a monthly basis, how much you spend on bills, how much to put away in your savings, how much debt you’re in etc.
Take some time to prepare a budget statement which should guide all your spending, take into account all your needs for the month and pen them in this statement. Don’t forget the little things, for they count. Knowing about cash flow and budgeting makes it possible for you to free up some cash from so many places thus making it easier to reach your financial goals. Failure to do this means you’re on a spending spree and you could have all of your income gone before you even know it.
When your spending is in compliance with your stated needs your wealth building journey can be enjoyed quicker. All these may not be easy for you, but it’s definitely worth its while.
To plan for rainy days
It’s important to budget your personal finances so that you have savings that you can live on when times are low, or for emergency/critical expenses. You rainy day plan can be a 5 – 20% of your monthly income that you set aside. These funds will help you pay for things that suddenly come up and are not included in your personal budget.
Being able to manage your finances is a good habit. Now more than ever, it is essential to know these little things and to take charge of your future. If you’re still clueless, you can even enlist the help of a wealth manager or consultant to set you on the right path. Always remember, you are responsible for your life and your financial future. Commit to finalcial management today!