Financial experts has tried their best to proffer an answer to this complex question, “What does it mean to be financially responsible?
Nigeria is currently in economic chaos, citizens are ranting and playing the ‘blame game,’ but who really is to blame? Would you not rather delve into finding means to upgrade your financial habit and be more responsible with money?
According to Investopedia
“To be financially responsible, you need to live within your means. And to live within your means, you must spend less than you make.”
The following steps will guide you towards being responsible with your money amidst economic crisis.
Basic Guides to being Financially Responsible
1. Paying Yourself First
It’s amazing how many people will spend every dime of their earning on what they ‘want.’
Unless you have a money tree somewhere at your beck and call, The Investopedia advised that the best way to be financially responsible is paying yourself first once you get your income; salary, wage, or business profit – before paying other bills. The target is to save 10% to invest in a plan or idea that can yield extra income.
Examining asset allocation strategies can be a good start to learn how to choose the right mix of securities for your investing strategy. After you’ve started investing, monitor the progress that you are making toward your goals and rebalance your portfolio as necessary to remain on track.
2. Emergency Fund Reserve
Most financial advisers would agree that you need to be able to support yourself financially for at least six months without an income. This means you must have been prepared for the unexpected. For married couple, who might be living on dual incomes, this means being able to pay the necessary bills such as the house rent, food and utilities on one income – or even neither income! If a missed paycheck would ruin you financially, it’s time to create another financial escape hatch to prevent this.
3. Don’t be Covetous of Thy Neighbors’ Properties
Being financially responsible means you should focus on providing your ‘needs’ and those of your family. Your neighbors spending habits should not dictate yours or set the bar for your standard of living. Assess yours or your family’s priorities and purchase only things that are necessary rather than trying to keep up with the Kardashians or following trends that are wrecking your bank account.
Financial experts agrees that having a budget is one of the core pillars of financial responsibility. As tedious as it may be to get your balance sheet together, you should know where your money is going. Business owners know the importance of understanding their cash flows and balance sheets; that is to say, no successful business exists without a budget. Read 5 Ways to be more disciplined to help you become more responsible with your money.
5. Personal Definition
This is the part where you define yourself financially, If you’re super duper rich, then you don’t have to scrimp (although the rules of wealth rejects economizing on your basic needs just to save money), you can buy whatever you want – luxury cars, Jets, Mansions – because you can afford it. Although those of us with lesser means might frown at this extravagance, it should not be confused with a lack of financial responsibility, since there is nothing wrong with buying what you can afford.
6. Being “Responsible” with your Money
We accept that earning money is a responsibility itself, which makes it very crucial for us to try and handle it appropriately. Financial responsibility means living within your means, regardless of the level of those means. So take a close look at your financial situation, evaluate you earning and spending habits, and make the necessary adjustments to put yourself on responsible financial footing.