BASIC FINANCIAL MANAGEMENT

Have you prepared your Annual financial Statement

You  feel this question is absurd. isn’t it? Yes this is November and time for finalizing accounts of last year, pay Income Tax , think about investments to save tax  and make provision for next year expenses in anticipation.

When we talk of budget we remember Railway and Union budget. What do we see ? In what items have  we got relief? Whether pass rates or ticket rates are affected? If so how much?

Generally in middle class families we are living from month to month. Any other expenditure is done from savings , swapping credit card or liquidating some assets.

Now is the time to make good for your next years harvest and also identify the financial strength of your family.

We always count our liabilities and assets and liquidate our assets to clear up liabilities.Assets can be of different types .Starting from savings bank account to house you live or Fixed deposits, bonds etc etc.

Now when i read Rich dad Poor dad i understood I am working for money While the Rich people make money work for them?

How is this possible? God has given everyone twenty four hours. How is it some are strikingly rich while others are not so rich.

Are these people blessed with some special abilities? Why this inequality? This book Rich dad Poor dad showed me the way for financial stability and enabling money work for you.

Now what happens when we receive pay,arrears,bonus etc. Along with this comes a list of expenses. 

If this money was not there will you spend? are you a person who will spend irrespective of anything and say whatever i do is for the welfare of the family and spend by taking loans , swapping credit card, liquidating savings/assets etc then God save this person and his family.

So if you are a person with ordinary prudence then this formula is for you. Add all incomes that means incomes from all sources like interest,  salary, pension, rent etc etc. every month.

30% of salary should be your expenditure, 15% savings, 15%  anticipatory savings,30% investments,10% charity.

Check whether your annual accounts depict this picture. Is it excess of income over expenditure or excess of expenditure over income.

If it is excess of expenditure over income then the situation is bad.If it is involving swapping early years savings then the condition is worse. If it is involving liquidating assets then it is tedious. Your financial condition is under ventilation. You can expect a big shock in future.

This means you are counting the eggs before it is hatched. Beware.

Start somewhere and keep going  till the goal is reached.

thanks

Best of luck.

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