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Vera
@vera_18
Monetary Value of Time
We all have some idea of how much our time is worth. On extreme ends, it is easy to know if a task is worth your time. For instance, if someone offers you $0.07 per hour and another $7,000 per hour, you would have no problem to decide.
However, in the middle of the time-value spectrum, it is less clear if a particular task is worth your time. While everyone has an hourly value, few people know the exact amount.
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Joanna
@joa71
Why Knowing Your Net Worth Is Important
Net Worth = Assets - Liabilities
Your net worth gives an overview of your financial situation at this point. It is the difference between what you own and what you owe.
Your net worth is positive if your assets exceed...
Calculating your assets and liabilities
Assets are anything of value that you own that can be converted into cash. Examples include:
- Investments
- Bank and brokerage accounts
- Retirement funds
- Real estate
- Personal property: vehicles, jewellery and collectables.
- Cash
Your liabilities represent your debts, such as loans, mortgages, credit card debt, medical bills and student loans.
Find your ideal
Determine your target net worth - where you want to be in the near-term and long-term future.
The following formula is helpful:
Target Net Worth=[Your Age−25]∗[1/5∗Gross Annual Income]
A 50-year-old with a gross annual income of $75,000 might aim for a net worth of $375,000 ([50 - 25 = 25] x [$75,000 ÷ 5 = $15,000])
Your net worth can be much more or much less than the amount indicated by the guideline.
Angela
@ang_10
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While frugality is undoubtedly important in personal finance, boosting your savings can also be done by earning more money.
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The More You Learn, the More You Earn
Your education has a greater impact on your earnings than other influences such as age, race, gender, and location. According to the U.S. Bureau of Labor Statistics, the average college graduate earns twice as much as someone whose education ended with high school.
If you can't commit to college, you can still improve your knowledge and skills with self-directed life-long learning. The best time to pursue education is at the start of your career. The next best time is now.
Work More. Work Better
Your pay is also based on the quality and quantity of your work. If you've been making forty sales calls each week, find a way to do fifty.
The quickest way to boost your income is to increase the number of hours you work. It can be done by working full-time, working overtime, or finding a second job.
Aniyah J.
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The Rational Approach To Buying Insurance - The Money Habit
Insurance Is A Bet
Generally, insurance is understood as a bet. We pay a premium and are secure about some uncertain future costs which may be substantial for us.
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The Insurance Calculation
The calculation for insurance runs like this: The company is profitable when the cost of premiums that we pay is greater than the future claim that we may ask for (having a certain probability).
Cost of Premium > (Cost of claim) x (Probability of claim)
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- We believe that the probability of us experiencing the event that we are insured against is high.
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