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Personal Finance for Beginners


Personal Finance
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Anyone can teach you how to save money but no one can teach you how to spend money. As our faces differ, so are our financial habits and money spending cultures. While there are people who are very conservative and reserved when it comes to spending money, there are others who are easy spenders. If you are going to have control over your money, the first thing you will need to learn is how to manage and control your spending. This is one of the best articles on personal Finance for Beginners you can find on the internet. In this article, I am going to show you how to manage and control your spending in order to improve and increase your finances.

Reducing Your Expenses

If you want to Increase Your Earning power through Savings, the first thing you have to do is to reduce your expenses. Most times it is not the size of our income that determines the size of our savings. Rather it is our spending culture. There are people who are earning very big yet they are saving very small because 90% of their income go into expenses. On the other hand, there are people whose income is very small yet they have a good savings because they have mastered the art of reducing their expenses to the bearest minimum.

Financial Independence

The goal of everyone who desires to become rich and wealthy should be to achieve financial independence. In my opinion financial independence is not necessarily having no bills to pay. No it is far from that. Any time I am talking about Personal Finance for Beginners, i like to talk about financial independence. That's because it is the bottom pot of all financial intelligence strategies that we are learning or going to learn. So it's very important to understand what it is and what it is not. Financial independence is a state of financial freedom where you don't have to work for money anymore but rather money works for you every day and night. You can be an entrepreneur or an employee, it doesn't matter. As long as you have to wake up every morning to work before you earn, you have not yet achieved the status of financial independence. A financially independent person is one who earns money without necessarily having to work for it. I will like to define financial independence in terms of having a consistent passive income flow rather than a state of being able to meet one's financial needs without depending on other people. Yes, we need to be financially independent even in its literal sense. It is not wise to always run to your dad or mon for financial support any time you need money. When one becomes financially independent he can take care of his own financial needs without needing any support from relatives or friends. This is amazing because it gives a sense of self worth. 

Controlling Your Spending Habits

To control and organize your spending habit, you need to identify your Fixed Costs, Rent, transportation, food, clothing etc. You need to differentiate between your needs and wants. Needs are those basic things you need which you cannot do without, for example food, rent, electric bill, clothing, transportation, health, security etc. However, wants are those things you spend your money on which are not necessarily important to you and your business at the moment. You need to identify those things you are spending money on whether they're truly a Need or Want. I prefer to spend my money on Needs and not Wants. That's because human wants are insatiable and resources can never be sufficient to satisfy your Wants. When you are trying to build your finances from down up, you don't need to gratify your wants. You need to meet your Basic needs per time until your finances grow.

To Gain Financial Stability

If you want to achieve financial stability, try living in the same house, using the same car, the same mobile phone, the same computer for as long as they can serve the purpose for which you need them. Living in the same house for at least 10 years can reduce the cost of moving around and searching for new houses. It can reduce the cost of spending to relocate to a new house. Using your Mobile phone for a very long time can help you achieve financial stability as you won't need to spend more money to buy a new mobile phone. As long as your smartphone can make calls or do exactly what you need it to do , why do you want buy a new phone? There are people who are crazy about every new phone that comes out in the market. You can't be changing new phones like underwears and expect to achieve financial stability at the same time. There are people who buy new cars every year even when the one they have is still in a good condition. It's time to become more conservative in your spending and take better risk in your business. Don't over spend on poor decisions. As you become wealthier you should cut down your risks. Invest your money in stocks, bond and other businesses that have better return on investment. Please avoid impulsive and

Aggressive spending. Don't wake up and start spending money without planning. Impulsive spending is red flag for anyone who wants to build his finances. Buy what needs to be bought and leave wants and liabilities off your budget.  Money spent is lost but money wisely invested will come back to you. Instead of spending money without proper decisions, sit down and write your financial goals and investment plan before you get money. You are supposed to have a great plan of what you want to do with your money before the money comes. When you get money and find out you don't know what to do with the money, that's when impulsive spending sets in. Money should meet your financial goals and plan written down. Before any money comes, you need to have a good business or investment where you want to channel the money if you don't want to spend it. It is easy to spend money which is in your pocket or bank account. If you want to cure your unnecessary spending habit, learn to invest in real estate and property. Once money comes convert your money into lands and properties so that when those wants begin to raise their heads, there won't be free cash in your possession to service them. People who keep too much money in their house spend alot of money on stuffs that can't bring them more money. 

Final Thoughts

When you get more organized and control with your money, the better you will become. One thing they don't teach you in school is how to make money. That's why this subject Personal Finance for Beginners is of paramount importance. You learn to save by cutting down your spending habit. If you still want to impress people with a fake life, then you are certainly not going practice what I have taught you in this post. Don't live to impress anybody. Live your life according to your dreams and visions, not according to people's opinion. God bless you. 

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