EASY FINANCIAL MATH YOU MUST KNOW

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Have you started on a journey to improve your financial picture? Do you finally realize it’s time to work on your personal finances?

If so, you have to know the basics so you can progress.

I am going to explain some easy, but necessary financial math formulas that will help you in your journey toward financial improvement.

• NET INCOME: PROFIT OR LOSS OR SAVINGS = TOTAL REVENUE(INCOME)- TOTAL COSTS (SPENDING) This is the first and most obvious math to know whether it’s for savings, profits, a business. Try to always know or guestimate what’s coming in or the average amount coming in, and what’s going out or the average expenditure.
• The 50/30/20 rule: More of a guideline than an equation, this gives you a decent monthly budget guideline.

50% of your monthly expenses should be for necessities (things you cannot be without or provide value you cannot be without0. 30% of your spending can be spent on wants. Also know as discretionary spending, this is spending for things you would like to have, but can do without. Finally, 20% should be put toward savings, emergency funds, or investing (including retirement accounts and personal investment accounts).

A 20% savings rate is a great goal to strive for. If you can do better than 20%, you will have a great chance to…