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To understand our relationship with money, we must explore ourselves. You can use introspection to discover the meaning of money in your life. This helps identify your money management ideals, attitudes and behaviors.
Even if you spend hours brainstorming ways to make more money, you may not give much thought to how you relate to money.
To understand our relationship with money, we must explore ourselves. You can use introspection to discover the meaning of money in your life. This helps identify your money management ideals, attitudes and behaviors. To do that, we need to answer a few questions honestly.
Be careful with your net worth
Net Worth consists of the money left over after deducting Debt and Debt from Total Assets. Your assets can come from a variety of sources, including income, business income, gifts, and inheritance.
So you sat down to calculate your net worth for the first time and you realized. you are in debt And not small debt, but deep debt. The kind of debt that is weighing you down without you even realizing it. But don’t worry. There are many options for getting out of debt and getting your finances on track. Or maybe you find yourself in a position to be financially independent now.
All assets (things you own) and liabilities (things you owe) need to be considered. This can be a daunting task, but it’s worth getting an accurate picture of your finances.
When it comes to liquid assets, cash is king. However, other options such as stocks, mutual funds, and bonds are all important. Consider them all at their current market value.
When listing your fixed assets, remember to include homes, cars, jewelry, works of art, and other possessions you consider valuable. To find the market value of these items, look around online to see how much similar items sell for. You might be surprised how much your belongings are actually worth!
Finally, all debts should be deducted. This includes bank loans, loans from relatives and friends, credit card debt, student loans, and outstanding bills. In other words, whatever you owe money. Subtracting all liabilities gives you a better picture of your net worth.
be careful how you spend money
Our relationship with money is much like our relationship with food. If you want to know what you’re consuming, you need to be aware of all the scraps that come in and out of every bite. The same applies to your finances – if you want to understand your money behavior, you need to be aware that every rupee comes and goes.
There’s more than one way to keep track of your finances. Some prefer a pocket-sized diary, while others prefer a mobile app to monitor their spending. Some people spend everything on their credit, wallet, or debit cards and everything is automatically recorded and accessible at the end of the month. That’s it.
make a budget and follow it
Track your spending for a few months and you might be surprised to find out how much you actually spend on things you don’t really need. Now is the time to create a budget and pay more attention to your spending habits so you can save towards your financial goals.
Calculate how much money you can spend and save using the simple 50-30-20 formula. 50% of income goes to needs 30% of income goes to entertainment 20% of income goes to savings
A budget is like a money map. It tells you where all your money should go, so you don’t accidentally spend your rent on new clothes or your utility bills on groceries. can cover
track your finances
Money Date can help you with this. You need a weekly “money date” just as you need a weekly date night to sustain a romance. is. This is the time to assess your savings, spending and most importantly your investments.
Development of personal financial literacy
Like anything else, understanding financial literacy takes time and effort. So, set aside an hour each week to study topics like taxation, goal planning, investing, and portfolio management. You can think of this as your own FinLit Hour.
Conclusion
Developing financial awareness is like laying a solid foundation for the dream of financial independence. Just as your home needs a strong foundation to support it, your dreams also need a strong foundation of financial knowledge to support it. By raising financial awareness, you can lay the groundwork for a brighter future.
Author Vineet Patawari is co-founder and CEO of ELEARNMARKETS and StockEdge.Views expressed are personal