Where are you heading Financially?

Posted on | May 21, 2013 | No Comments

If you don’t know where you are heading and how to get there, what are your chances of getting there? If you operate your finances on a pay as you go basis, taking it one month at a time, eating with ten fingers, how do you plan or hope to accumulate wealth. How will you become wealthy? If you earn N300k per month and spend N300k per month, what are your plans to accumulate wealth and become wealthy? Are you waiting for a financial miracle to change your financial situation? Read more

About Assets and Liabilities 2

Posted on | May 20, 2013 | No Comments

These definitions are within the context of cash flow. A good investor invests for both income and capital gain. When you are getting income from the asset, you will not be under pressure to sell, and if you decide to sell, you can hold back if the market is down, as you do not really need the money – you are getting cash flow. There are instances where it makes sense to go in for capital gain only, for example taking a position in real estate or stock market (or any market for that matter) before a boom. Read more

About Assets and Liabilities

Posted on | May 19, 2013 | No Comments

The reason folks acquire liabilities thinking they are assets arises from financial illiteracy. Conventionally, an asset is something you own that has value. This shows up on the asset column of your balance sheet. For the financially literate, what makes an item an asset or liability depends on the cash flow pattern. In corporate mergers and acquisitions, the partner with a better cash flow calls the shots. Cash flow is the name of the game. The moment you are out of cash, you are out of the game. Read more

Image Affluence: All that Glitters is not Gold

Posted on | May 18, 2013 | No Comments

From the previous post – You can be Millionaire and Broke, we can see that having a high net worth does not necessarily translate to being cash rich. You can be asset rich and cash poor, and may be forced to dispose of your assets at below market prices when you negotiate from a position of weakness – you need the money. ‘The seller needs the money’ is music to the ears of a buyer. It means he is about to make a purchase at a bargain. Read more

You can be Millionaire and Broke

Posted on | May 17, 2013 | 2 Comments

Your net worth is not a true indicator of your financial situation. You can be rich and broke, a millionaire but shaking out your pockets to make some basic purchases like fueling your car or money from groceries. If you have not been in that position, it may sound like a fable. You see, your net worth does not say anything about your cash flow. You may own five houses, four cars and a mountain of stuff, but that is of no use when you have bills to pay. Read more

What is Your Net Worth?

Posted on | May 16, 2013 | No Comments

Another aspect of your financial fitness test is knowing your net worth. Most people have no clue what the number is. The do not know how much they own or how much they owe. They carry a fuzzy number in their head, based on assumptions not related to reality. If you have serious financial goals, you want to know where you are now and where you want to be in the next one, five, ten years etc. You want to know your asset quality and your cash flow situation. You want the naked truth. Read more

Your Financial Fitness Test Results

Posted on | May 15, 2013 | No Comments

Congratulations if you did your financial fitness test. You are among the few who have a clue as to the state of your finances. That was a starter version but serves well to give you a snapshot as to how you are faring in managing your finances. What does the result mean?

If you answered yes to zero to six questions, your finances is not in good shape. You have been diagnosed with an acute case of financial illiteracy. You are heading downhill and you need help. Read more

Your Financial Fitness Test

Posted on | May 14, 2013 | No Comments

There are many financial tests available. Below is one I came up with to assist you get going. This is a beginner’s version. Taking a financial fitness test is a quick way to get a snapshot of your financial health. It takes about twenty minutes only. All it requires are simple yes or no answers. Try and be very honest with yourself. No one is watching you. Do not work towards an answer. Read more

Your Financial Health Check Up

Posted on | May 13, 2013 | No Comments

Typically, an adult should have a routine comprehensive medical check up once a year, to be sure everything is okay, and for early detection of medical conditions that can become deadly when not detected early. You also need a routine financial health check up, to see if you are heading in the direction of your financial goals, or are heading nowhere financially. I am fascinated by the parallels between health and finance. For example, I have come to discover that you cannot become rich by cutting costs. You simply become cheap. Read more