Tag Archives: investing

Are you Financially Fit?

9 Jul

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How  money smart are you? Are you financially fit? Do you have the means to support your chosen lifestyle?

Take this simple test to check your financial fitness.

  1. Do you have enough savings to last you 6 months if, for some reason such as an illness or a job dismissal, you have to stop working today?
  2. Do you have any form of personal insurance, for example, accident or disability or life insurance?
  3. Do you have any form of personal medical insurance?
  4. Do you have any long term savings plan such as a pension or educational plan or any endowment or retirement plan aside from your contribution to 401k/SSS/GSIS?
  5. Are you saving or investing money regularly from your salary?
  6. Do you know how much you are worth today? Do you have your own Statement of Assets, Liabilities and Net Worth?
  7. Do you budget your spending and monitor your monthly expenses? Do you have your own Personal Income and Expense Statement?
  8. Have you attended any seminar or read any book on improving your knowledge on personal finance? Do you invest you time and effort on increasing your financial IQ?
  9. Is your monthly debt payment (for consumption purchases or credit card payments) every month less than or just about 15% of your monthly income?
  10. Do you have a personal plan with specific financial goals based on a specific timetable?

Here’s how to score  your financial fitness:

Give yourself 10 points for every “YES” and 0 for every “NO”.

0-40 points: You are financially unhealthy.

You will face serious danger the moment you lose your source of income. You need to review your expenses, particularly your debt payments.

You have to stop all unnecessary expenses immediately.

50-70 points: You are in a good position to be financially healthy.

You just need to improve your financial plan.

First, determine the personal net worth you want to have when you retire. Ideally, you should break down this target every 10 years. This means you have to choose the lifestyle you want to maintain.

Second, estimate how much you will need every year to sustain this lifestyle. This will easily let you fix your financial goal (or how much, in terms of earning assets you should have) every 10 years.

80-100 points: Congratulations! You are on your way to financial freedom.

You have the commitment and the discipline to achieve your financial well-being. Keep it up and don’t fail to exert effort to learn new things about how to further achieve your financial goals.

Don’t stop here. I encourage you to keep learning and start building your financial IQ. Just like your physical muscles, you need to develop those financial muscles. Before you know it, your financial plan is going to take shape. And you will be on your way to your financial freedom.

Life is Amazing!

LENY

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Top 5 Money Lessons You Wished You’ve Learned

8 Jul

Money is not the root of evil. It is the love of money. Money can help you achieve happiness and joy by using it to bless others. I’d like to share with you how you can manage your money well so you can be a source of joy not just to yourself, but to your family, and to others as well.

Here are the top 5 lessons I have learned about money early on in life:

Lesson #1: Know the difference between an asset and a liability

In the old definition, an asset is something you acquire or purchase, like a car or a house and has money value. A liability is something that you can claim against an asset, like a credit card bill, debts, loans or payable. The new definition of an asset is something that puts money in your pocket, like a rental apartment or a business and funds your luxuries or liabilities. A liability is something that takes money out of your pocket, like jewelry, car or your house, and something that you purchase or acquired.

Lesson #2: Mind your own business. 

Buy and grow your assets. Some of these assets to develop or grow are: businesses that do not require your full time or presence, company shares or stocks, bonds, T-bills or SDAs (Special Deposit Accounts), income-generating real estates such as a rental apartment or dormitories, royalties from intellectual property from music, scripts or patents, and anything that has value, produces income and has a ready market.

Lesson #3: Pay yourself first

Set aside at least 10% from your income to build your business or fund your emergency money or investments. Then make saving or tithing as your next priority. This is the Power of Discipline. I know this is painful. But as the saying goes, “No Pain, No Gain.”

Lesson #4: Make choices everyday. 

How you spend your money is a reflection on how you use your most valuable resources: time, learning, and money.  Use your valuable resources wisely. If you want to predict a person’s future, just look at his expenses. Do you spend it in the latest gadgets, the latest fashion, or the latest accessories?  This only build your expenses, debts, and liabilities.

Or do you use it to invest and build on your assets, like seminars on investing and personal finance, personal coach/mentor, books, gym memberships to keep you healthy and fit, and donations to charities and churches?  This is the Power of Choice.

 

Lesson #5: Use your assets to pay for your luxuries, your liabilities.  

Acquire assets, or things that put money in your pocket, by paying yourself first. Then, you can purchase your liabilities or your luxuries by the income and cash flow generated by your assets. This is the power of focus. So many people today have money to buy their luxuries first but never seem to have any cash to purchase their assets. They get into debt simply because they keep on buying more and more luxuries, and they never stop to think that these are in reality, just liabilities.

So are you ready to apply these lessons so you can start blessing others and multiply your joy?

Life is Amazing!

LENY

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