Saturday, February 8, 2014

The financial ratio that you live by

Ok, most finance expert said that earlier you save, the better of you will be. You may get more saving than the people save lately. However, the economic meltdown has down the economic. You should try hard to reach the wealth. To keep your wealth, here are some financial ratio that you should keep.
1. Save 10% of salary
You have to earmark 10% of salary to saving. After receiving the paycheck from the boss, you can put the ten percent in envelope. Ten percent may be little but it can grows over many times.
2. The debt is not higher than 30% of your asset
Too much debt will kill you. Calculate the ratio of the debt know and income. List the entire debt that you should pay and the asset that you have. Divide the debt with your asset.
when your debt to asset ratio high, the bank or other financial institution will not lend money. They know that you are difficult to pay off the debt.
3.The ratio of the invest in stocks
Some expert says that the formula of investment percentage is 120 minus your age or 100 minus your age. As you become older, you should reduce the percentage of the stock. On the other hand, you should put so much money while you young.
Due the market index is not good, you can decrease the percentage. The market index may recover someday. You can get benefit over many times with the right company stock.
4. Spend 50% of you earn
Do not spend too much. Surely, it might be difficult for someone whose has low income. They should try hard to fulfill daily necessity. For the millionaire, they may just spend a percent of the salary a month, meanwhile, the employee may spend 110% of the salary. If your spending is higher, you must increase the income.
Other way to solve the problem is to reduce the expenses. You may spend your money to unwarrantably needs. You may eating too much. why do not to cook?
The financial ratio is not standard. You may adjust with your financial condition. For example: You may save more than 30% if you stream more money.

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