Financial success in life isn’t an accident, and the phrase “personal finance” encompasses how well you manage your money and plan for the future.
Since no one really knows which way the economy could go next, what you do now, as it relates to financial activities and decisions, will affect your current financial state and the health of your financial future.
Many time-tested words of wisdom offer guidance for how you should save and spend, and you can consolidate all the advice of the financial gurus into several broad financial rules.
Know the Math
The basics of personal finance are that money goes out and money comes in. If this is the extent of your knowledge, you are in for a rough road. Leaving your finances to chance will sabotage your financial future since you won’t be able to accurately determine short or long-term purchase goals.
Knowing the math behind your finances can get you started on the right track.
Start with calculating net worth. This will be the difference between what you own and what you owe. List your assets and liabilities, subtracting your liabilities from the assets. The result will be your net-worth. Though this is your current financial position, net worth may fluctuate over time.
In order to stay on top of the math, you should calculate your net worth at a minimum of once a year.
You can figure out what areas you are showing financial success, you can evaluate your progress on paying down debt, and you can highlight areas that need more focus. By establishing a budget, you make…