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November 9, 2022 // The Four Pillars of Finance:

The four pillars of finance 

 

Money shouldn’t consume your life and motivate your priorities, but it is vital for a functional lifestyle. Whale personal finances, in general, seem like a complicated and intimidating subject to broach; it must be grasped for you to establish a budget and understand how healthy your finances are and how they can improve. However your personal finances look like, how much debt you may or may have accumulated, or what you are economically invested in, your financial situation will always fall under a basic economic framework, usually referred to as the four pillars of finance. This framework is split into four components: debts, income, assets, and expenses. Looking at each of these pillars and how they relate to your personal finances will give you a much better understanding of how current economic circumstances, how they can improve, and if you require professional assistance from certified financial planners in your area. 

 

Find out the four pillars of personal finances, what they mean, and how you should gauge your financial circumstances and ultimately better them. 

 

Debts

 

Financial literacy is often hard to acquire when its generally not taught within most educational systems, and because of this lack of understanding, financial liabilities are frequent. Debts are one of the pillars of personal finance because getting the full picture of your finances means knowing how much you owe in terms of credit card debt, student loans, mortgages, and household bills. These debts will also determine your credit score and your ability to acquire a loan if ever needed, so managing and beginning to figure out how to mitigate these liabilities is imperative and can be achieved with help from certified financial planners. 

 

Income

 

Another pillar of personal finance is your income. Examining your income and how you spend it will give you more clarity on your financial situation on a daily, monthly, and yearly basis. A comprehensive view of how you spend your income will give you an idea of how to reduce your spending and save your money, which can be used to reduce your debts and sizable liabilities. To check your income, you can look at your prior tax work, pay stubs, online bank account to view deposits and withdrawals, and ATM receipts you may have kept. From there, you can acquire assistance from certified financial planners, who will help you budget your income and reduce negligent spending habits that can culminate in financial liabilities. 

 

Assets

 

Assets refer to the items you have purchased and own that are worth a certain amount of money and can enhance your entire net worth. Your assets can also be an allotted amount of cash, financial investments you have made, property you own, your home, valuables such as jewelry, and life insurance policies. A home is often the most valuable asset, but if a mortgage is a part of the homeownership, it can offset its value and worth as an asset. An asset will be an imperative pillar to understand as it becomes increasingly vital to your finances as you age. 

Expenses

 

While already lightly touched on in association with your income, your expenses mark another pillar of your personal finances. How you spend your money is paramount to thoroughly understanding your financial situation and ascertaining the ability to change the number of expenses you oversee, if applicable. Working with a financial advisor will give you more guidance on how you can responsibly manage your costs and where you can reasonably save your money. 

For the best financial planning advice in Calgary, visit PlayCheques Financial Planning. As dedicated financial professionals, we are committed to helping our community of Calgary with financial planning and wealth management. PlayCheques’ team of professionals are also experts in estate planning, retirement planning, and financial planning for doctors. Using a unique behaviour approach to serve our clients in Calgary, Playcheques assists each and everyone with the utmost understanding and integrity. We aim to safeguard your financial future with direct solutions that will prove beneficial.