Personal Finance

Personal Finance is the application of the principles of financial economics to an individual or family's decision. It involves budgeting, record keeping, income and net worth statement and savings.

In 1 Timothy 5:8, the Bible emphasizes on the need for a man to be able to provide for his own family hence the need for cultivating a savings habit, budgeting and also planning our finances.

Savings simply means spending less than earned and investing the difference for future use and for unforeseen circumstances.

WHY DO I NEED TO SAVE

• The future is uncertain and nobody knows what lies for him in his future, so he should save money against bad days.
• It helps to build wealth.
• It helps to improve one's standard of living.
• It aid in planning, most especially for the future.
• It reduces poverty.

IMPORTANT NOTES ON SAVING

1.       The lower your expenses, the higher your savings.

2.       Expenditure runs faster than income.

3.       An increase in salary may not translate to increase in savings except expenditure is kept at the bearest       

          minimum.

4.       Money saved can be re-invested to generate more income. However, investments should be made on 

          valuables and not useless unproven stuffs. Don't fool around buying things that you will throw away or 

          overgrow tomorrow, rather buy assets/things that will grow in value in the nearset future.

HOW TO SAVE MONEY

One should be frugal to save money. A prodigal man cannot save anything, he will rather run into debt. To save, one has to be economical. The following are useful tips:

•   Identify exactly how much of your income should be saved.
•   List the items on your budget that you can let go in order to save.
•   Clearly define a time period over which you will need to save.

1.         Determine your overall income: Are you on a fixed salary where you know for certain how much you are taking home monthly? Or a freelancer with varied monthly salary? Having a rough idea of how much money you can earn is the key in planning how you save.

2.         Identify how you spend money: What are the bills that you have to pay for every month? What other expenses do you incur? Ask yourself if you can do without some of the things on your budget e.g. having to eat out everyday instead of eating properly cooked meal that is made at home.

3.         Add up the amount of your regular expenses and subtract it from your income. The left over is the money available for savings. This amount can be divided into two:

i.          Flex money and spending money: A part of the left over set aside for miscellaneous purposes. And also money to be spent on things clothes and outings.

ii.         Savings: Ideally, this should be about 30% of your income or at least 10% of your monthly income.

4.         Clearly define your purpose of saving for a period of time.

5.         Track your progress to make sure that you stay on target, check your progress on a regular basis.

6.         Choose where you plan to save it based on your goals.Savings should be kept with reputable organizations such as banks.

In conclusion, saving money is a very useful habit which should always be encouraged among the people both old and young. This is the aim for presenting this article to you, and I believe that its been informative and educative to you, thanks for reading.

Please do check back, as other articles that improve excellency in life is unveiled. However, reading every thing above to the letter, is not enough but putting them to practice.