Financial success has everything to do with balance, perspective, values and things that make us personally happy. For many, the idea of having more is the greatest motivator: more money, more things. For others, the idea of financial success means to have less: less stress, less possessions. Everything depends on you, and what you consider important within your personal finances. However, there are some parameters that will help you achieve financial success, whatever your outlook on life is.
Everyone, regardless of our ambitions or projects, must have an emergency fund; ideally equivalent to 6 months of our salary.
The idea is to be able to face our current expenses in case of unemployment, or to be able to solve an unforeseen expense of considerable size, such as an accident, a disease, etc.
Fund for retirement
As employee, you are constantly making contributions to your retirement fund; if you work on your own, you should worry about allocating a percentage of your income to a savings account, for when you stop working.
A good rule of thumb is to have double of your annual income by the time you are 40, four times by the time you are 50, and eight by the time you turn 67.
Credit card debt
No matter what your personal consumption preferences are, debt on credit cards is always bad, why? The cost of credit card interest is very high, and a debt that started being insignificant can damage your personal finances permanently. When you use your credit card always, always, pay the total of your debt.
Real estate is an important source of wealth, and a form of investment. Whether you’re just considering on buying a property, or paying for it, to have an estimate of how your investment has moved, simply take the current market value of your property and subtract the outstanding balance of all the mortgages. This will give you an idea of whether your investment has been maintained, if it has grown, or if you should reconsider ownership.
In simple terms, your net worth is your assets less your liabilities; is what would be left if you sold everything you have and payed all your debts. To know if you are on the right financial path, you can calculate your net worth here, and get an idea of how you are going. But net worth it is one of those things that depend on your lifestyle, and how you manage your personal finances. In the end, as long as your debt is less than your income, and is reducing constantly, you’re going in the right direction.
Whether your personal finances’ objective is to have more or to worry less, your financial success depends on you, and the steps you take to prepare for the future, to optimize your resources, and to enjoy your money in the way that best suits you as long as you are always thinking about the future.
Take control of your money today, discover Glass and find your way to financial success, whatever your definition may be.