If you talk to a 100 people, you will get 100 varying definitions of personal finance. In reality it doesn’t matter what your definition is, but what the outcome of the actions, that support your views, are. Possible outcomes that you want to achieve can be enough money to put your kids through university, to buy a boat or a house, to start a business and /or to retire with enough money to last until the end of your life and your spouse’s life, depending on where you are in your financial life cycle.
Research have shown that women outlive their husbands (as of 2017 life expectancy for men was 76,1 years, while life expectancy for woman reached 81,1 years). Your wife will most probably end up with more money to manage that you ever had to! For that reason, personal finance management is not as personal as you always thought, but it is in fact a family affair.
For most of us it is virtually impossible to start your grown-up lives without debt. We need tuition fees, cars, houses, school fees for kids and a myriad of other expenses. This could inevitably lead to falling in to a debt trap. We don’t distinguish between what we need and what we want and start using easily accessible debt to finance our day to day living expenses. This is a very dangerous position to be in. It is never a good idea to finance short term needs with long term debt. If you use your credit card, never spend more than what you can afford to settle on the due date. Credit cards (bank or branded credit cards) are some of the most expensive credit options available in the market.
With all this said, let us just take a moment to look at some tools that you can use to make sure that you meet your personal financial objectives.
1. Set financial objectives that you what to achieve.
2. Create a budget to achieve these objectives.
3. Get out of debt as soon as you can, by swopping expensive debt for more affordable options. Then apply financial discipline to not fall in the debt trap again.
4. Start your investment journey early. Remember that compound interest work for you when you save, but against you when you have debt.
5. Test whether what you want is really what you need. A bargain is just a bargain if you need it!
In the following weeks we will expand on the above and give you some more tools that will assist you in managing your personal finance. In the meantime, go for it, start implementing some of the above. It will immediately help you to take control of your personal finance.