Personal finance management is an essential aspect of achieving financial stability and security.
Despite the rising prices of everyday items and new product launches, experts revealed is possible to manage finances effectively.
By following a few “rules of thumb,” individuals can manage their finances effectively.
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– These include saving at least 20 per cent of monthly income and being able to afford purchases at least twice. Many people live without any safety net or buffer. The entirety of their monthly income is spent even before a new paycheck comes in. The perfect definition of living from paycheck to paycheck. This is a dangerous way to live as most jobs these days are not as secure as many are made to believe. At least 30% of your income should be carefully tucked away in a savings account. The other 70 per cent should be split between needs and luxury, with 50 per cent taking care of the needs and 20 per cent catering to wants and luxury.
– Renting a home that is less than 30 per cent of your income. Everyone wants to live in expensive and top-brow areas like Beverly Hills in California, Banana Island in Lagos, or Maitama in Abuja. While many want to settle down there, the truth is that most people are unable to rent or own apartments in those areas. In the same way, some other relatively expensive neighbourhoods may be way out of your budget.
– Having an emergency fund that can last at least 5-6 months of living expenses is an ideal personal finance management.
– By adhering to these guidelines, individuals can create a safety net, avoid financial strain, and achieve peace of mind and financial security in case of unexpected events.
