January 2007

Any view on personal finance and the potential to creating assets MUST begin with understanding what areas one needs to focus on. Without this, one can only run around aimlessly like a headless chicken.

Wealth constitutes two major components -  Income and expenses. Wealth increases by achieving the following objectives:

1. Increase your income and/or
2. Decrease your expenses

 Agreed that we are all aware of this. But frankly, how many of us have been actually been able to achieve the above objectives consistently for prolonged periods of time? Well, not many.

Notice that I used “and/or” expression after the first objective? Do you know why?

The answer is very simple, yet it is useless when someone else tells you. Take minute and try to interpret the meaning in your context. Once you understand this, you will be able to analyze your own position fairly.

I will be back shortly with the answer…

 

 

 

I have been reading quite a few articles on saving for retirement, asset creation, retiring early and so forth. I found many of these articles to be useful to a person who is already aware of his financial position. Howevere, a beginer, who is already confused, and seeks a solution through these articles, may find himself even more confused if he is not directed properly. How many times have you heard more than one view on a particular article from your peer group itself? Now imagine these posts being read by people across the world with different mindsets, cultures, and most importantly, different financial positions. Confusing, right?

Well, I am going to try and make it easy by sharing my bit on the fundamentals. We will look at what constitutes asset creation and how does one decide what fits his or her personal situation. In my next post I will talk about these constituents. I will also try to guide you to other useful material to aid your decision making process.

To begin with, take a look at the personal finance blog for some tips on improving your financial life rightaway…..and wait for my next post