Financial crisis is a pandemic that hits any economy anytime; be it the economy of a nation, or the economy of a family or an individual at the least. Hence, it becomes imperative for every individual to attain financial independence that could be translated into financial success, which has become the norm of the present-day lifestyle. Such individualistic global financial mandate assumes that all the people, by default, are equipped with the basic knowledge to make sound financial decisions; so, what about those who fall short of the assumption? The people without perennial resources and sufficient financial knowledge might end up feeling like ‘fish out of water’, wondering why their financial status keeps dwindling.
This article ventures to shed light on a few best practices and financial initiatives that might help people who are battling bad economic conditions to wriggle out of their financial mess.
10% Makes Big Difference
Money saved is as good as money earned. A decision to save 10% of one’s earnings on a daily or monthly basis and the resolve to stick to the decision against all odds is the beginning and the mother of all plans to financial success. Seeking and frequenting the company of financially successful people is certainly one of the next steps towards financial success. While in the company of financially successful people, one might absorb the characteristics, habits and daily rituals of them. The productive interactions in the process are proven sources to gain deeper insights and knowledge that could be critical in making major financial decisions.[1]
Need for Professional Advice
Subsequently, from the insights gained, an end-to-end financial plan of action has to be drawn, managed and implemented on a daily basis. For this purpose, professional advice could be sought from experts who have a long history in doctoring the financial success of many. Successful professional financial advisors help to assess and accurately determine one’s financial health. Based on realistic forecasts derived from such knowledge, they also offer guidance to make short-term and long-term investments.[1]
Understanding Assets and Liabilities
Understanding the difference between ‘Assets’ and ‘Liabilities’ is the next lesson to be learned. Investments like, bank deposits, shares, properties, etc., that keep appreciating through the progress of time are called Assets. For instance, investing in developing one’s skills is an asset, for it periodically earns money in the form of a job. Contrastingly, “anything which takes away money from your pocket is a liability. For example, your smart phone that takes money every month from you in terms of recharges or bill payments or even EMI for the device”. [2]
Investing in liabilities or depreciating assets like vehicles, home appliances, etc., affect the long-term wealth and is best to avoid. However, when there is a necessity or obligation to invest in a liability, it is better to purchase it with the profit earned from smart investments and ensure that the liability is the best that is available at the lowest price in its class. Similarly, strategizing the spending of money to mitigate the risk of falling in debt and to maximize the profitability/utility of the investment is an indispensable tact for progressing to financial success.
An Appeal
The adage, “Information is wealth” literally translates to being when it comes to acquiring financial knowledge and applying the knowledge to achieve financial success. So, over and above the suggestions briefed by the preceding contents of this article, constantly probing relevant resources to learn and stay in tune with the latest on money, finances, investments, property, shares, etc., shall certainly prove to be the ultimate means to thrive in today's economic design.
References:
- https://blog.iqmatrix.com/financially-intelligent
- https://yourstory.com/mystory/financial-intelligence-important?utm_pageloadtype=scroll