All Financial resources that you accumulate and own are called “Personal finance” and any decision and activities you make relative to your income resources will gauge how healthy your financial status is. Not borrowing money and keeping your credit to a minimum is a sign of having a sound financial status. This is ideal but achieving this can be somewhat difficult. However, there are basic financial rules to follow if you would want to have a healthy financial life. Following and applying them properly will hopefully lead you to a positive financial goal. The following is something to think about and may prove helpful in leading you to a bright financial future.
You need to know how much you are Worth
First ask yourself, “What is my net worth?” To do this, you would have to initially calculate your gross worth which includes everything that you own of value. These include your assets and income resources. Deduct your liabilities (what you owe) such as loans and other expenses from your gross worth and you arrive on how much your net worth is. The result from deducting your gross worth against your liabilities should always be positive because if not, then you have a big problem.
Create a Financial Plan
In order for you to stay in the black follow the most important financial rule which is to plan your expenses against your income. You need to eliminate expenses that have proven to be unnecessary. It is equally important to reduce some of your expenses to help build a sizable amount of surplus which in turn will help you when a sudden financial emergency arises. In order to achieve this, there is a need to spend your money wisely by prioritizing and spending only what you actually require. Prioritizing your expenses can be done by making thoroughly analyzing your financial status where you can come up with a good plan to positively use your income resources. However, your income and expense will be changing so in the same way, so make income and expense projections projection plans at least once a year.