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Tips to improve your Personal Finance

Personal Finance | Promise Banks | Primis bank | Finance

When it comes to personal finance, financial stability and security is tied to effective money management. In the midst of inflation and a constant stream of enticing products, most people find themselves trying to thrive on their limited resource like never before. It’s a daunting task just to contemplate how to keep up with these expenses, let alone follow through with plans.

Many people adopt a lackadaisical approach to their personal finance, opting for a “wait and see” attitude. However, there are simple yet effective financial principles that can help simplify this complexity and bring clarity to your financial situation. While these guidelines may not be universally achievable, the closer one is to attain them, the better.

  • Save at least 30% of your monthly income: a lot of people live paycheck to paycheck, leaving themselves vulnerable in case of unexpected expenses or a job loss. It is very important to build a safety net by saving at least 30% of your inflow. Allocate the remaining 70% wisely, with 50% covering necessities and 20% reserved for discretionary spending.
  • Rent a home less than 30% of your income: While it may be tempting to live in prestigious neighborhoods, it’s crucial not to exceed your budget. Your housing costs should not surpass 30% of your annual income. Avoid giving in to peer pressure and base your housing decisions on what’s financially possible for you.
  • Maintain an emergency fund equivalent to 5-6 months of living expenses: Job security is not guaranteed, and unforeseen circumstances can arise at any moment. Having an emergency fund capable of covering 5-6 months of living expenses provides a crucial safety net during challenging times, such as job loss or medical emergencies.
  • Be able to afford it at least twice: In a world constantly tempting us with new gadgets and luxuries, it’s essential to resist impulse purchases and assess our financial capabilities objectively. The rule of thumb here is to only make purchases if you can afford them twice over. For instance, consider buying a car worth N5 million only if you have at least N10 million in savings.
  • Invest: many people downplay the importance of investments in finacial stability. Investing in the right channels with guaranteed roi will boost your finance in ways that you cant imagine. Imagine investing right in a land banking project or in stocks and bonds. With a properly thought out investment, you can make as high as 400% roi over a couple of months or years. This is the power of investments.

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