Passion Hustles

Managing Your Personal Finances Financial Checkup

Managing Your Personal Finances: Financial Checkup

This is for you, if you want to start managing your personal finances towards financial freedom. 🙂

I was a very ambituous teenager. I remember when I was seventeen and read all these financial books, I thought to myself – I’m going to be rich one day.

I thought I got it all figured out. I’ll finish school, work my ass off, buy a house, rent it out, earn from real estate, build other businesses, get myself a farm, travel the world, and a million other things.

When I reached the age of 20, however, I lost track. Managing personal finances and doing financial checkup was the last thing on my mind. Ways to save money? Oh, please!

I got a job. I am earning money every month. I can buy anything I want. Don’t worry about tomorrow – things will sort out themselves.

I use my credit card as free money, which was the biggest mistake I made until I was buried in a lot of debts. Yikes!

At an early age, I was anxious and couldn’t sleep at night. God, how could I ever pay my debt?

And the bank was calling me everyday. I was so scared.

That’s the reason why I started this blog. Now that I got the time, the freedom to do things that I want – and I’m not messing with you – I finally got the financial freedom anyone could ever wish for.

I don’t have to think about what am I going to eat tomorrow. I can take as much sleep as I need.

There’s no boss following up on me – because I am now the boss.

I’ve reached the other side. And it wasn’t easy. As I said, I worked my ass off.

Phew, that was a long introduction. I can go on and on, but this is not about me. This is all about you and your personal finances.

That’s why you’re here, right?

How Do You Start Managing Personal Finances?

Let’s first define what a net worth means. Everyone has their net worth, which is simply your financial assets (money in the bank, investment accounts) less your financial liabilities (credit card bills, mortgage).

Remember that assets do not refer to your personal possessions. If you have a car that requires maintenance, and you’re not earning from it, then it is not considered as an asset.

Things such as clothes, computer or television decreases in value so I don’t really count them as investments.

Managing your finances is long and continuous process. You reading this blog is just the beginning of it. It will contain the following steps:

  1. Paying off all your debts.
  2. Making plans for your existing money and the money you are yet to receive.
  3. Setting money goals.
  4. Creating an emergency fund.
  5. Planning and saving for retirement.
  6. Considering your family and looking into insurance. If you’re from the Philippines, get a free quote for your insurance here.
  7. Monitoring your credit score.

How to Start Saving Money

I can’t emphasize enough that savings are very important. The same thing goes with your emergency fund. I’ll go more in-depth with that later, but it is one of the pillars for financial independence.

Let me introduce you to savings rate. Knowing how much you can save each month can give you an idea how you can get to your target money goal.

Sure, you can earn $100,000 a month,
but how much are you able to save from that?

One of the best ways to determine your savings rate is calculating your employment income and expenses in the past year. Don’t worry – it’s not that complicated.

Here’s a template you can download and use:

How to Calculate Your Savings Rate

Now that you got that information from our simple financial checkup, you can analyze the information and make adjustments where necessary.

If your savings rate is high, then good news for you! If not, don’t worry because you can still work on that. There are different ways to save money, and hundreds of free tools you can access to grow your money.

Managing your personal finances is the same as going to church. You check it everyday. You socialize with people who have the same mindset and educate yourself as much as you can.

Join the IMG free workshop here to know how else can you manage your personal finances.

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