ACTIONS YOU SHOULD DO IF YOU WANT YOUR PERSONAL

FINANCE TO IMPROVE.

Isioma Isichei.

At the turn of each year, we all have our dreams and we possess new energy levels
to achieve them. This individual expectation is like a cycle. Everybody wants to
succeed, at least in their minds but not everybody will. Below is a list of 26 actions
you should take if you want to improve your personal finance this year.

1. REVIEW THE PAST YEAR: The first thing you should do is to analyze the
past year. Research has shown that of the lots that make ‘new financial resolutions’
every year, less than 10% actually get to follow those resolutions through the year.
Does it not bother you that at the beginning of last year, you also made resolutions
that you failed at? Why turn around in cycles every year? Take a pen and paper, sit
down and review your financial activities for the past year; from your income
earnings to spending. Break everything down into tiny bits and you will have a
clearer picture of why some of your financial desires didn’t come to pass. It could
be that your total expenditure outweighs your income.

Simple Guide: Create a ledger of credit and debit. Every of your income, no
matter how little, should come to the credit side while expenditures come to the
debit. Sum each side up. If your debit is over 30% of your credit, do you still
wonder why that financial dream of yours was out of reach in the past year?

2. CREATE A CHECKLIST OF ALL YOUR FINANCIAL MATTERS: The

second step is to create a checklist of all your financial matters, while including
‘Emergency’ as the last in the checklist. This is because emergency situations will
always arise and can dent your plans, if you are not adequately prepared.

The best way to create this checklist is to break each financial matter down into
months. Many people go through the year with false belief that they have
everything sorted out in their heads. The more reason they fail because human
beings are susceptible to memory loss. Sort them out in black and white instead,
and a new level of motivation will come on you each time you look at the
checklist. Alternatively, tools such as PocketGuard and Spendee can help you do
this.

3. SET SPECIFIC FINANCIAL GOALS: After creating the checklist, the next
step is to set your financial goals complete with specific dates. That is only when
your wishes become goals since the dates act as deadlines thereby putting you on
delightful pressure to beat them. Any goal without a specific date of achievement
is not a goal. You are merely wishing. Sadly, this is what many people do.

By specific, I don’t mean you saying you will make a million naira in August
2018. Be more specific with date. Rather, say ‘August 30, 2018’ for instance. Then
it becomes a goal that you can wake up every morning and chase around.

4. KEEP A FAITHFUL BUDGET: The failing of many people is that they are
never faithful to their budget. This shows indiscipline. Learn to set and work
within budget. That way, you can meet most of your financial plans and
obligations. Going beyond budget will only put you in bad debt and make you
miserable. If you cannot plan your budget in black and white, there are wonderful
digital tools such as Wallet and Personal Capital that enables you to do this and
carry your budget around in your phone. Some others like PocketGuard even alert
you that you are already spending beyond budget. Take advantage of these tools
for better living. One thing you must never do is to simply budget in your head.

5. SPEND WHAT IS LEFT AFTER YOU HAVE SAVED: Learn to live by this
rule today. For every dime you earn, save at least 10% of it. Now, this is the
difficult part: many people aren’t disciplined enough to do this. The key to
achieving this is to separate your business income from your personal finance.

6. LEVERAGE ON GOOD DEBTS AND AVOID BAD DEBTS: Everybody

should like debt. This is a principle of the wealthiest people in the world. They like
good debt and abhor bad debt. Good debt brings you more cash flow and if well
managed, sets you towards financial freedom. Bad debt on the other hand, brings
you unneeded luxuries, put serious pressure on you and can make you miserable. If
you must boost your personal finance in 2018, try to avoid bad debts.

Good debts are incurred towards fulfilling rewarding financial obligations like the
purchase of businesses, investment and stocks or real estate; these are things that
will compound your financial interests over time and make you independent. Bad
debts are taken out to buy non-essential luxuries such as cars, holiday trips and best
proposal dinner. These luxuries don’t compound wealth. Rather, they take what
you already have. Decide which one you want.

7. PAY OFF YOUR SMALLER DEBTS FIRST: By now, you must be saying
‘but I am in debt already. My debtors are breathing down my neck’. All well and
good. Make it a point of focus to liquidate your bad debts. Start by making a list of
your bad debts in order of their sizes. Then settle the smaller debts first. Any debt
that is fully settled should be cancelled out before moving to the next.

The logic behind this is simple. The smaller the debt, the easier it is to pay off.
With each debt cancelled out, the more confident you will become of liquidating
the bigger ones. This confidence brings with it desire not to keep going through the
show of cancelling out debts every year. In other words, you’ll become a better
manager of your finances.

8. LIVE YOUR MEANS: This must be a strange one. I have heard many people
advocating that people should live below their means in order to have reasonable
savings. Well, I actually believe people should live their means. If you can afford
to conveniently buy out a business, why not? The key to living your means is
convenience.

In measuring your convenience level at taking on situations, you must be truthful

to self about your financial situation. You might be on a 100, 000.00 Naira per
month wage and feel you can live in a two bedroom apartment in town. You
should calculated the other supervening expenses like monthly feeding, clothing,
welfare and transportation to know how much you are left with to contribute
towards the means you want to live.

A simple rule I advocate is this: if a personal financial project is more than 10% of
your actual income, then you might be better off living below your means.

9. AVOID HAVING ENTITLEMENT MENTALITY: As a major, nobody

owes you anything in life. So quit that lazy mindset. In business as in your personal
finance, you are solely responsible for the decisions you make; for your successes
and failures. Once this is firmly ingrained in your mind, the zeal not to fail will
become a greater motivation that pushes you towards making smart financial
choices. You will learn the act of taking responsibility. The most successful
entrepreneurs don’t sit down and wait for goodwill from some family members or
friends. They struggle their ways through web of failure until the elusive success is
captured. Then they work harder to keep the success. You should also have that
mindset.

10. AVOID THE LOTTERY: This might not go down well with some lottery
lovers but if you don’t have firm control of your personal finance, then stay off the
lottery. People ask and I tell them lottery is business of luck based on correct
punditry or guessing of a given situation. You expend money time and time again
in the hope of becoming lucky and hitting the jackpot. But what if you don’t? Let
us even assume you win. Have you taken stock of how much you have contributed
to the lottery over the months and years and if what you won is up to your
contribution? A few will be lucky to hit it big. However, a vast majority of people
won’t. The wealthiest people know that waiting for some big manna from heaven
is a lazy way of understanding the concept of luck. They know that luck is a
deliberate effort of an individual therefore they diversify their portfolio before
engaging in lottery.

11. OPERATE 3 DESIGNATED BANK ACCOUNTS: I am advocating this

because most times we tend to draw from a single bank account to solve our
personal financial challenges. The danger in this is that such practice is an enemy
of financial planning and often runs people dry.

If you are serious about securing your financial future, then have 3 bank accounts
where you save at different times. The first should be for savings and this could be
your salary account. The second is for emergency while the third is for
philanthropy. Since you’re working on a budget, you know which account to go to
on each occasion and discipline will stop you from touching the other accounts
when you have no need to.

Finance experts like Robert Kiyosaki advocate this strategy. I recommend it also.

12. TRACK YOUR NETWORTH ALWAYS: Do you really know how much
you are worth? The problem is many people have a false sense of security. They
believe selves to be worth more than they actually are. People who take control of
their personal finances make it a habit to track their net worth always. Quit
blushing over your assets. Try removing your liabilities from those assets to get an
idea of how much you are really worth. Whatever remains after you have
subtracted your liabilities from your assets is what you are truly worth.

13. DIVERSIFY YOUR INVESTMENT HOLDING: Diversifying will help you

to minimize your investment risks. Smart working entails you have your risks
spread in different sectors. If your investments in a sector fail, your investments in
other areas will help to mitigate the effect of your loss. There are many reasons
why you should diversify: loss of business, inflation, taxation, government policies
and political instability are a few of the reasons why you should never remain in a
single sector as an investor.

14. CREATE PASSIVE INCOME: This is a key to financial freedom. To build

passive wealth, you must be involved in activities or buying assets that generate
you more income. To boost your personal finance this year, start engaging in
activities that will generate you income even when you are not seriously working.
Leverage on technology and get involved in online businesses, get involved in
genuine network marketing programs, invest in viable businesses and watch your
income compound.

15. LEARN THE RULES OF INVESTING: That you want to diversify and
create passive income does not mean you should not follow the rules of investing.
The first rule of investing is that you should never invest in what you don’t
understand. Get adequate knowledge before plunging your hard-earned money.
The second rule is that you should never invest money you cannot afford to lose.
Investment can be a risky venture, so have liquid cash you can fall back to if the
investment fails.

There are other rules you should learn such as the principle of compound interest,
legal framework of what you are investing in, and so on.

16. ENGAGE IN YOUR PASSION AND HAVE FUN: Some people are
miserable because they are not doing what they love. Some are stuck in jobs they
hate just for the salary. To do great things in life, you must be passionate and
enthusiastic about what you do. I love providing business and financial solutions to
people who need them. It gives me joy.

Learn to be passionate about what you do. That is when you can have fun and
enjoy life to the fullest. Not loving what you do can drive you to make poor
financial choices.

If you hate what you are presently doing, here is a tip: give yourself sufficient time
to properly invest in what you are passionate about. Then move on.

17. EXERCISE TO KEEP YOUR MIND AND BODY IN SHAPE: Many

people work few hours and they are fagged out since they don’t perform any kind
of exercise. Engaging in physical exercise keeps your mind at alert and your body
in great shape to take on any physical activities.

18. TAKE YOUR HEALTH VERY IMPORTANT: All your goals in life will
go as far as your health permits. Your health is your number one wealth; therefore
you shouldn’t be careless with your health. I have seen people who are careless
about what and how they eat and drink, and are clumsy. Personally, I hate
sluggishness.

19. BE FLEXIBLE AND ALWAYS ADJUST: We all want to appear to be in

charge, that we have planned ahead and are ready to take hold of our financial
situations. However changes will occur along the way, some of them beyond our
control. The people who take biggest control of their personal finances are people
who adjust to favorable evolving trends. They are spontaneous in their approach
towards life. The danger of being rigid is that you are not open to new ideas and
opportunities. You are stuck with your viewpoint, with your personal
understanding of doing things which may be what is limiting you. The wealthiest
entrepreneurs and CEOs have a trait in common. They hire the smartest people to
bring new innovative ideas that they can learn from and make adequate
adjustments along the way. This is how businesses succeed. This is how personal
finances compound. There are times when you follow your conviction, but make
sure you have taken every necessary factor into consideration.

20. WORK SMART: Have you noticed that while you are stuck in your 9-5 job
for a few thousands every month, another person works few hours and earns far
higher than you? The rule of the 21 st century is working smart. While I loathe
laziness and cannot encourage it, yet your hard work should be embedded in
working smart. Think of disruptive ways you can engage the public that will
generate you more income. Do you have large following on social media? You
should leverage on that and promote your passion. Create reasonable awareness.
The more awareness you create, the more people that need your services will seek
you out. You don’t have to wait for the fat bucks to come to you so you can rent
the choicest office space. Take advantage of technology and start with what you
have.

21. LEVERAGE ON TECHNOLOGY AND AUTOMATE SAVINGS: This is

the age of technology and everything is going digital. You cannot afford to keep
living an analogue lifestyle. Get accustomed with the various available
technologies that can help boost your personal finance this year. It is useless, for
instance, to be carrying cash around when you can easily perform banking
transactions on your mobile phone. You can automate your savings and spending
so that you don’t exceed your budget. An application like PocketGuard lets you do
that.

22. GET INVOLVED IN PHILANTHROPY: I believe that giving is an

effective way of receiving. There is fulfillment that comes with helping people
around you to be better than they were. Philanthropy is not all about giving alms to
the needy. It is about doing the little things to improve the circumstances of those
around you. You can engage in community service, render pro bono services to do
that really need it and so on.

If you have enjoyed some excellent services from a startup, you can help that
business survive by a little words of mouth marketing. Doing such little things go a
long way to impact on your personal finance as you will be seen as a trustworthy
person whose recommendation is genuine, and this can only be good for your
business.

23. HAVE A RETIREMENT PLAN IN PLACE: Some people think retirement

is working for several years in the civil service and retiring to a life of pension.
Retirement is planning for a life of less stress at work, not that you stop work
altogether. Even if you own chain of companies, you cannot work forever. You
should give way at some point for younger, more dynamic leadership while you
take on the overseer’s role. So what are your retirement plans? Do you have
insurance in place? How about retirement savings account? Have you buried your
finances in different investment portfolios that will generate you income in years to
come?

Do you have any shares or stock holding, and more especially, do you have any
real estate investment? Have you taken time to study about some government
policies in your country and even study some government introduced financial
incentives such as the sukuk bonds in Nigeria to know if it’s a risk worth taking?

I have seen some people go broke after retirement because of lack of adequate
planning. Don’t fall into that trap of waiting for some pittance called pension from
the government or whatever organization before you can survive. That is a life of
misery, unless you want to live your whole life dependent on others for your basic
survival.

24. HAVE A MENTOR: I believe so much in the power of imagery. You can
only conceive an idea after you have built images in your mind. That is what
mentorship does to you. Whatever financial race you are in today has been won in
the past by another. So make a mentor out of that person. Use their struggles and
triumphs as a guide so that you can arrive faster at your destination than they did.
Ask them relevant questions and get answers. There is no point making some
mistakes if they can be avoided by having a mentor. We should learn to do things
from a point of comfort.

25. START NOW, IT’S NEVER TOO LATE: Finally, it is never too late to start
planning towards your financial independence. You can start putting in the hard
work now and realize the benefits later. The danger is in not starting at all.

Tip: Remember to take stock at the end of the year to see how well you performed
in boosting your personal finance.

http://www.4tuneblog.com/2018/02/13/actions-take-personal-finance-
improvement/