As someone looking for how to start up personal finance, we are going to direct and guide you on those basic five foundations of personal finance so that you will know the basic information and be able to manage your finances very well.
Understanding the five foundations of personal finance
This information we are dishing out is very necessary for your financial growth, Remember information is power, and ignorance is not an excuse either. So read everything we are going to discuss here to benefit and gather enough information that will lead to your financial liberty.
When you don’t know the right step to follow you may end up on giving up at the end, we don’t want such a thing to happen that is why I dedicated my time to writing this content so that you reading it will benefit freely, the only thing you have to do is implement it.
Everyone needs personal finance because with it one will be able to live happily, carry many investments, and make other good plans for himself without running out of finances.
Here are the five foundations of personal finance
Make financial Decisions
Create solid means of income
Set rules and in it
Avoid falling into debt
1. Make financial Decisions
This is important in everything one does before embarking on personal finance journey you have to decide and have conviction for yourself that you are ready to do so.
This decision is what will help you overcome any negative situation that may come up along the way of your financial journey, With the decisions you make, you will be able to stand firm.
This decision may include
· Decisions to be financially okay
· Decisions to keep moving when tough situations arise
· Decisions to work hard to improve your financial status
· Decisions to take the right step toward financial freedom etc.
2. Create solid means of income
Solid means of income means the main thing that contributes to 80% of your income, it also brings money steady to your table.
Creating solid means of income is among the five foundations of personal finance
Having a solid means of income will help you to solve some of your needs without borrowing money.
You have many sources of income but they are not bringing in money to you steady, then look for another job that can bring steady income to you.
How to create a solid income
You can create a solid income by the following means
· Acquiring online skills that are high in demand like graphic design, blogging, website development, coding, copywriting, etc. These skills will earn you lots of money when it’s been acquired.
· You can also acquire offline skills that will fetch you steady income like laptop repairer, phone repairer, TV repairer, electrician, barber, painter, etc.
· You can set up a business at a good location to bring steady income for you like restaurant shops, boutiques, grocery stores, etc.
· One can decide to work under someone to earn income steady.
Either way solid income is made does not matter hence it is legal, Remember to include solid income in your personal finance pursuit.
3. Set rules and abide by them.
Creating These rules will guide you on your financial journey so that you won’t do the wrong thin
When you map out some rules then follow those rules so that You won’t fall out of your rules.
At times people set personal financial rules for themselves but Not all can abide by such rules, before you know it one thing or the other will make them go against their rules.
Sometimes others may forget those rules they set. Five foundations of personal finance
To avoid forgetting your rules you may need to write them down or Better still write it on your phone or device and save it there.
You may even use and save it on your screen saver, this is just to Make you not forget your financial rules.
What are those personal financial rules you need to set?
Examples of the rules are
· Setting rules on not to borrow money
· Setting rules to give some of your monthly income to charity organization
· Setting rules on not more than you have
· Set rules not to spend lavishly etc Avoid falling into debt.
Debt is another financial setback to personal finance in these five foundations of personal finance “Avoid falling into debt” is among those financial foundations.
According to 2023 debt statistics from the New York report
The total household debts are $16-17 billion
Credit card debt $9billion
Auto loans $20 billion
Student loan $1.57 billion
Day By day people falls into loan and debt, to avoid falling into this trap follow this steps.
· Stop borrowing money to buy things
· Buy what you can only afford
If the amount of thing you want to buy is high, then start saving up for it when you have gotten the amount you can go on to make the purchase. Etc.
If you Follow this up you will see how you will be unlocking your personal finances.
5. Invest wisely.
Investment is another way to multiply your income within a short period, many millionaires and billionaires of today got their riches through those investments they made which turned out in their favor.
The five foundations of personal finance know that investing wisely is enlisted, after going through this post make sure you start investing in something valuable.
Five foundations of personal finance
Remember the word “wisely” This is because investment is full of many unknown risks but investing wisely will help to curtail to risks.
One of the reasons why people invest is to keep their money busy instead of leaving at bank doing nothing.
You can decide to go into long-term time investment or short-time investment.
Long-time investment: the type of investment that lasts for a long time, it is a kind of investment that stays up to 5 years and above.
Short-time investment: is a type of investment that does not last For a long time, a short-term investment mainly lasts for 6 months to 1 yrs most times it can last for 3 years.
The longer the investment holds the more profit will be realized e.g. The more land stays, the more it will also increase in value. Five foundations of financial freedom
Types of investment to make
· Investing in forex trading
· Investing in cryptocurrency Etc
· Investing in landed properties
· Investing on houses
· Investing in cars etc
· Investing in consumables items eg rice, beans, melon, ogbonu, etc
We have discussed those fundamentals steps one needs to take to attain financial freedom, all those things needed For you to do well financial have been unveiled.
Remember to seek more knowledge Before investing also stay out of debt or pay your debts earlier to avoid accumulating more interests.
Five foundations of financial freedom I know that you have grabbed the information you have been searching for.