Are you doing good when it comes to managing your money?
Here are five questions that you can quickly answer to know where you are in the five levels of money management.
1. Do you have financial goal(s)?
- Financial goal motivates and guides you.
- Gives you answer to the question, "Does spending money on this gets me closer to my goal?"
- The goal should be specific, have an amount, and a deadline.
- Most people wants to be wealthy, but they don't have the amount in mind nor when they want to have that amount.
My answer:
My financial goals:- $100,000 at 30 yrs old
- $1,000,000 at 40 yrs old
- $10,000,000 at 50 yrs old
2. Do you know how much you spend every month?
- What is not measured is not managed.
- Answers the popular question, "Where did all my money go?"
My answer:
Yes, I track my expenses on a spreadsheet.3. Do you spend more than you earn?
- Live according to what you have, not what you want.
- Never take consumer debt, those stuff lost value and you pay more due to interest.
- Remember your goal before you spend, "Does spending money on this gets me closer to my goal?"
My answer:
No, I spend around 40% of what I earn every month.4. Do you have emergency savings fund (6x monthly expense)?
- Provides buffer when large amount of money is needed urgently.
- Save you from bad financial offers.
- We can't predict the future, but we can be ready when it happens.
My answer:
Yes, I have more than 12x monthly expense emergency savings fund.5. Do you invest your money with an average return greater than inflation rate?
- Today's $100 worth only $55 20 years from now.
- You will need more amount of money to sustain your current lifestyle in the future.
My answer:
Not completely, I'm still working on this one.How about you? Up to what steps are you now?
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Also please submit the poll below, and don't worry it's always anonymous.
Where are you in five steps of money management?
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