You might wonder how you can determine if you might be managing your money well. However is no universal rule in order to answer your question, there are several performance indicators that you can utilize. With them, you can find out in case your handling in some aspects fits the recommendations of the specialists.

What shows a good management of your cash?

What indicates a good management of your money?

There are a number of requirements that allow you to determine when you are controlling your money well. They act as a kind of indicators that your funds are well managed, and you have financial savings and investment capacity.

Of course , these requirements do not apply in particular circumstances of life, for example , if you are attending an emergency. Or if you are investing in a private enterprise of your or a third party, or obtaining real estate.

Three main indicators that you should utilize, to determine if you make a great management of your money are usually:

Personal financial savings rate

Personal savings rate

The personal cost savings rate is the part or even fraction of your gross income that you simply dedicate to saving. Professionals agree that an adequate financial savings rate is between 5% and 10%.

If you manage to be in that will range, it means that you can encounter the future and the unforeseen along with greater availability of money.

Debt rate

Debt rate

The debt rate is the percentage of your monthly net income which you dedicate to the payment of the loans. Net income is acquired by subtracting the set expenses incurred month simply by month from all earnings. The only debt you can think about in these expenses is that related to the mortgage loan.

Those versed in private economics point out that the financial debt rate should not exceed 35%. In this way, you do not overload your money in the payment of financial obligations and you will avoid falling directly into arrears.

Proportion of unproductive expenses

Percentage of unproductive expenses

An unproductive expense any that is not used to generate an income possibility; that is, it is a waste. If you do buy a computer to improve the overall performance of your work, you are creating a productive expense. If you use your own credit card to cancel the birthday dinner, you create an unproductive expense.

The relationship between unsuccessful expenses and total costs should not exceed 15%, to prevent waste.

Leave a comment

Your email address will not be published. Required fields are marked *