This is an introduction to a series of posts that will help you to take control of your personal economy. I believe that as women we are usually caught up in just surviving from one day to the next and we never give ourselves time to breathe and take an honest look at where we are in life.
I hope to help women to be completely comfortable and in control of their money. I'm excited, so let's get started.
What is an economy?
An economy consists of the production, distribution or trade, and consumption of limited goods and services by different agents in a given geographical location.
When I speak of a personal economy, I am referring to your income and your consumption and how this affects the quality of your life.
Everyone has a different personal finance story and the truth is that only you can take control of your money. That seems obvious but I have suffered from a feeling of helplessness in the past when it comes to own finances and I have learned that I am not alone in that regard.
I would look at my bills and my bank account and feel overwhelmed by the responsibilities. I had so many ideas of what I wanted or needed and limited funds.
Although I was richer than I had ever been before, I felt poorer than ever as well. I looked back at my early twenties and wondered how I managed to do so much with seemingly so little? And when did that change?
If you are feeling the pinch, it comes down to one simple truth. Your income is not supporting your consumption. You be used to hearing about your country's own poor economic outlook or a fiscal deficit but you never realise that you yourself are in the same position.
For instance, in Barbados, the Government had to retrench hundreds of workers because they found themselves in this same position. Then they had to change a long standing policy of providing free University education and introduce fees.
Needless to say, these measures are a bitter pill to swallow for the population.
If you are constantly worried or stressed about your own personal deficit, you need to take a similar bitter pill in the present to secure a greater financial future.
Although we as women are used to making do with what we have and still keeping our families running, we are often reluctant to take full control of all aspects of our finances and shy away from investing, budgeting and long term planning.
You may have heard of lifestyle equalization before. This process allows you to take stock of your income versus your obligations and work to reduce your expenditures until what you make and what you spend are more in line.
Ultimately, you are trying to end each month with a surplus of funds that you can save towards Retirement, Emergencies and Fun.
I encourage you today, as the first step in being a responsible C.E.O of your Personal Economy, to sit down and work out your Net-worth.
Your Net-worth is the sum total of all of your Assets minus all of your Debts.
Assets are things that you own that have value as well as cash that you have on hand. A house with equity is an asset, as well as a car and any other personal items like jewellery or furniture that could be sold.
Debts are anything that you owe on, which would be your mortgage, a car loan, credit cards and also personal loans or any bill that you are behind on.
There are several calculators available on-line, and here are a couple to get you started. I have also included a link to a downloadable spreadsheet for PC users:
There are lots of theories about what your Net-worth should be at a certain age but I don't ascribe to that thinking as everyone travels a different road in life. What remains true however, is no matter were you are right now, you can improve your situation by systematically tweaking your behaviours.
Ultimately you want your Net Worth to be a positive number and have it steadily increasing month to month. This may not be possible at first, but don't be discouraged. This is the first step of many to help you get to a place where money only makes you feel happy and positive.
In other posts I will continue to discuss how to get a handle on your personal economy and I hope that you join me for the journey.