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Trekking The Monetary Jungle:
A Six-Step Guide To Financial Security
When you hear the word wealth, more often than not, you equate it with
images of palatial abodes, luxurious sports utility vehicles, country
club shares, midnight shopping sprees and heavenly tropical jaunts.
You think the term is only suited to the likes of media moguls, hotel
heiresses, fashion czars, Silicon Valley residents and the uber lucky
breed of multi-million lottery winners.
As an ordinary employee earning the average five-digit annual salary,
you may feel nowhere near the promise of wealth.
But honestly, how do you define wealth? Supposing you have $1 million.
Does that make you rich? How about $10 million? Or $100 million?
In reality, wealth is nothing more than the capability to support your
chosen lifestyle. Even if you have millions of dollars, you could still
be considered poor if you can't fund your way of life.
The secret of having wealth is in knowing how to build from your limited
resources and how to keep it from being squandered on your unnecessary
wants. Want to know more? Read on and apply these easy-to-follow suggestions.
First, you have to evaluate your financial status.
One way of doing this is to construct your statement of assets and liabilities.
Sounds complicated? Not really. You don't have to be a financial wizard
or an accounting genius to make one. You only need a piece of paper,
a pen and a dose of honesty. Divide the paper into two columns: the
first part should be labeled Assets while the second should be entitled
Liabilities. Under the assets portion, list down all the cash you have
in the bank (savings account and time deposits), properties (house,
vehicles parcels of land, paintings, jewelry and expensive memorabilia)
and investments (mutual funds and unit investment trust fund).
In the liabilities corner, enumerate your loans (housing, car, business),
credit card debts and other payables.
After filling up the two columns, subtract your liabilities from your
assets. If the answer turns out positive, well and good. If the result
is negative, it means that you have a negative net worth and you have
some financial restructuring to work on.
Second, pay yourself. Upon getting hold of your paycheck,
make sure you automatically deduct 20% and save it in the bank. This
will ensure that you have savings for the proverbial rainy day as well
as enough cash to move for your daily needs.
Third, learn how to budget. Financial budgeting is
one of the most unappreciated talents in the entire world. It is usually
taken for granted that a lot of people end up buried in debt because
of lack of know-how. A budget allocation should be drawn up after you
have subtracted the 20% as your “salary”. You have to distribute
the remaining 80% to your basic needs such as your food, rent and payment
for utilities (water, electricity, phone bills).
Fourth, improve your spending habits. You may be surprised
to discover that a lot of your expenses are not necessary. Do not be
tempted to buy the latest model of the mobile phone in the market if
your phone is still working well. Likewise, avoid rushing to the nearest
mall at the mention of the word sale. Make sure that you really need
something before buying it. If you blindly follow all your wants, you'll
be poorer than a beggar. Remember that your spending habits determine
your financial success.
Fifth, invest. Whether you opt for government securities
like treasury bills and bonds, or mutual funds or the highly volatile
stock market, make sure that your risk tolerance is at par with your
chosen investment portfolio. They provide relatively higher interest
rates than a bank's savings account so you might want to check them
out. Make sure you go to a reputable broker so that your money will
grow, not go down the drain.
Lastly, supplement your income. If you have extra time
and have the knack for teaching, apply for a part-time teaching job.
Or you can also tutor little tykes how to play the guitar if you are
musically inclined. To the budding writers, apply online for freelance
writing jobs.
The world is full of opportunities. It's up to you to take advantage
of them.
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