Question

1. What are the keys to a personal finance success?

Answer 1

The most important keys to personal finance success are having no debt, savings, and investments.

Debt takes away significant amount of our earnings in the form of regular interest payments. Whether we earn or not, we will have to make interest payments, in good times and bad times. Having no debt leaves a large portion of our money to savings and these savings can be invested.

Savings is another important key to personal finance success. This requires discipline and living below our means. If we do spend extravagantly, then it becomes harder for financial success.

Investments are necessary for growth in our net worth. It is with investments we can expect our money to work for us, rather than we work for our money. If we invest early and let the compounding to work in our favour, then time will come where we can enjoy the benefits of compounding without having to work actively.