5 Effective Steps to Achieve Financial Success - PowerPoint PPT Presentation

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5 Effective Steps to Achieve Financial Success

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Title: 5 Effective Steps to Achieve Financial Success


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5 Effective Steps to Achieve Financial Success
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  • As entrepreneurs our financial and emotional
    well-being are often tied up in the performance
    of our ventures.  Entrepreneurial ventures offer
    no guarantees, so when there are financial highs
    and lows, our emotions often jump on for the
    ride. 

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  • Achieving financial success in business doesnt
    come quickly or easy, but it is not unachievable
    either.  As strange as it might sound, if your
    business is going through a rough patch, there is
    no reason why your personal finances should be
    disrupted.

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  • In the past Ive struggled to separate the value
    of my businesses from my own net worth, and self
    worth.  As an entrepreneur this is natural, as
    you work often becomes your identity.  Its all
    part of the entrepreneurial and business startup
    mentality.  I see this as a good thing. 

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  • Nobody cares more about your business than you
    do, but when it comes to your finances, this type
    of relationship isnt always sustainable or
    financially healthy.  Trust me, this is one of
    those business management tips I learnt the hard
    way.

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  • To maintain stability and clarity between your
    personal and business life, you must separate
    youre personal and company bank accounts.  

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  • This allows you to stay calm when your business
    is experiencing a rough patch, makes it easier to
    decide what you can and cant deduct at tax time,
    and it will also make it easier to grow your
    business or even sell it.

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  • Id still recommend adopting this approach during
    times of financial success and stability.  But in
    addition to this, you should leverage your
    finances to secure long-term financial security.

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  • Want to know how? Here are some of the secrets to
    becoming financially successful

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1. Setting up clear financial goals
  • Like all good things in life and business,
    a clear business plan and goals help us stay
    motivated and focused. The same rule applies to
    finances as well. Before you can start dreaming
    of financial success, you would need to define
    what financial success means to you, and what it
    looks like.

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  • When creating a financial plan, you would need to
    set clear and achievable goals for yourself. For
    example, in 5 years time you may aim to earn
    20,000 annually in passive income.  You may see
    this as a way of supporting the life that you
    dream of.  This is why setting up a goal with a
    clear plan is essential.

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  • You can divide your goals in three categories
    short-term, mid-term and long-term financial
    goals. But your job does not end with setting up
    these goals. You should also determine the
    actions required to enable you to achieve them.

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2. Assessing your present financial situation
  • You cannot plan the future unless you are fully
    aware of the present, and past. In order to
    realistically plan your future financial success,
    you should evaluate your current financial
    situation, and determine what you need to do to
    reach your goals.

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  • Are you walking on the right path, or do you need
    to make some changes? When assessing your
    financial situation, you must consider two
    aspects

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  • Stocks  Some of the large organisations in the
    world are divided into millions of shares. Buying
    one of these shares means you have the ownership
    of a small yet significant share of the company.
    You will receive money from the dividend
    payments. You can also make a good sum by selling
    the share at a higher price.

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  • Bonds  As a bondholder, you will be lending the
    government or a company some money. Organisations
    issue bonds when raising funds. Usually, the bond
    holder receives the principal or the par value
    when the bond matures. You will also receive
    interest while you are still holding the bond.

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3. Creating a plan for spending and saving
  • One of the essential steps before starting a
    business is to understand your funding streams. 
    This should be an ongoing process.  Once you have
    thoroughly evaluated your present financial
    situation, it is time for you to create a plan
    for your spending and savings. This plan should
    show how you plan to spend your money in the
    future.

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  • How much you spend on clothing, on groceries and
    on retirement fund all should be included in
    the list. While you are planning your expenses,
    remember to swear by the golden rule of finance
    management, your expenses should never go past
    your earnings. You can start with the Cash Flow
    Worksheet. If you have a negative cash flow, you
    will have to make adjustments to lower your
    expenses.

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4. Setting up an emergency savings fund
  • If you operate a startup business in Nigeria, Id
    recommend that you setup an emergency savings
    fund in order to survive financially difficult
    times.  Although business is booming in Nigeria,
    business in Nigeria can still be volatile. 

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  • Because of this entrepreneurs should at least
    plan towards having a savings fund as a backup.
    Lets face it no matter what kind of financial
    hardships you are going through, there are
    certain obligations that you cannot avoid.  An
    emergency savings fund will help you keep up with
    the financial obligations without any hassle.

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5. Investing wisely and diversely
  • While you are focusing on building your
    investment fund, dont forget to invest your
    savings wisely. Investing the right amount of
    money in the right places can help you generate
    significant income in the future. This earning
    will only add as bonus. Here are two of the
    primary types of investments that you can
    consider making

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  • Net worth  Everything you own such as cars,
    house, furniture, certificates of deposits,
    savings and checking account, stocks, bonds etc.
    has a monetary value. These things are called
    assets. Liabilities, on the other hand, are
    monetary obligations that you need to fulfil. You
    may have liabilities such as car loans,
    mortgages, credit card debt, student loans,
    personal loans and so on. When you deduct your
    liabilities from your assets, you are left with
    your net worth. Positive net worth means when you
    have more than owe.

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  • Cash flow  Cash flow includes both in-flows and
    out-flows. In-flow includes your paycheck, along
    with investment earning, alimony, child support,
    government benefits, gifts, rent and so on.
    Although most of us able to keep a track of cash
    in-flows, many forget to keep a tab on their cash
    out-flows. With expenses increasing everyday due
    to inflation, it may hard to know where you spent
    every penny. That is why having a Cash Flow
    Worksheet is essential to keep a track of both
    incomes and expenses.

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  • So these are just a few of the ways you can pave
    your path towards long-term financial security.
    You may add to this list depending on what
    financial success means to you, and how you want
    to achieve it.  Id always recommend that you
    consult a financial professional to advise you of
    the current legal requirements, and the most
    suitable financial products available.

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