The Finatical
Week of March 22nd, 2022 - Income to Expense Ratio, Automation in the Business World, Businesses Leaving Russia
Topic Breakdown - Income to Expense Ratio
Different people spend different amounts of money on items that they believe to be important to them. The problem is that many people don’t fully understand how much money they should be spending based on their income. A good income-to-expense ratio is essential in order to prepare for the unexpected, invest enough money, and enjoy greater security in your finances overall. In this article, you will learn about income-to-expense ratios, their importance, and how expenses can be reduced.
An Introduction
The reality is that there is no single best income-to-expense ratio. This ratio varies from person to person. Although “in general, experts recommend using the 50/20/30 rule to create your budget, especially if you’re a young adult,” according to mint.intuit.com. No matter what your income is, this rule is useful in managing your expenses. The 50/20/30 rule is very simple and helpful in creating guidelines; 50% of your money could be spent on living expenses, 20% should be saved and invested, and 30% is left for personal expenses. Keep in mind that this may not work for everyone and can be readjusted, but make sure to save at least 20% of your income. It is also important to note that those looking to retire early or invest a lot would want to limit living and personal expenses as much as possible so that they can save more money to retire or invest with.
The Importance
Having a well-thought-out income-to-expense ratio is very important for numerous reasons. The main reason you should track your expenses is to identify and get rid of unnecessary spending habits. These expenses can seem small, but over a long period of time, they will have taken out a large amount of money from your wallet, which you could’ve saved or invested instead. Having a set income-to-expense ratio can also be useful in tracking your financial progress. Over time, as your income increases, you can try to keep your expenses the same in order to save more money. Maintaining expense ratios is also important in keeping your finances organized, which is essential because unorganized finances could lead to unnecessary expenses.
Reducing Expenses
You may still be asking, “how do I reduce my expenses to save at least 20% of my income?” The answer to this lies in the form of tracking expenses. Create a spreadsheet or use a financial tracking app to see where your money is going. There are countless financial tools online for you to utilize. You can then take action by canceling unused or unnecessary subscriptions, for example, and taking time to find alternatives for expensive purchases in the future. You should also consider the importance of what you are spending money on. Sometimes, it is better to buy cheaper items instead of pricier ones in return for a higher percentage of money saved to align with your income-to-expense ratio. The most important step in reducing expenses is to identify room for change.
Creating an income-to-expense ratio for yourself and sticking strictly to it can provide a multitude of benefits. The extra money that you save can be invested and make you more money in the future, and extra savings can also mean early retirement for some people. Financial independence is a big responsibility, and expense tracking is an essential step in taking control of your finances.
Financial Trends
The Rise of Automation Processes in the Business World
It is clear that mobile banking is through the use of smartphones for accessing online banking services. Currently, there are reportedly 57 million users using mobile banking. According to a report by CAIC, mobile banking will become the largest channel for accessing financial services in the near future. The reports also projected the number of smartphone users to go from 41% in 2021 to 71% in 2024, nearly 30 percent! However, the surprising news is that the usage of mobile banking is increasing more in Asian countries than it is in western countries.
Due to the increase in demand for mobile banking and applications that support mobile banking, there are a number of companies that have started to offer consumers software-based solutions. The voluntary changes that mobile banking has created in the banking sector consist of operational cost, 24/7 services, efficiency and less error, and customer experience. Since banks have started to use mobile banking applications to provide their financial services online, it has resulted in their operation costs being reduced. The most important goal for banks is to provide their services to their clients all the time and generate a profit out of it. The use of online banking has also proven to make banks efficient as a whole bank. In the standard banking system, it was hard for banks to always accommodate the needs of their customers, but now with online banking, banks are able to assist their clients at all times.
Businesses Leaving Russia
Due to Russia invading Ukraine and starting a war despite being unprovoked, companies throughout the world are pulling themselves out of Russia. They are particularly leaving due to the sanctions that President Putin has set in place as industries are experiencing strains from their consumers. It has been relatively difficult for businesses to do business in Russia and generate a profit as customers and activists have pressured businesses to cease any trading with Russia through social media. As companies continue to pull out Russia and put bring an end to their sales in Russia, there is a doubt of whether the Russian public believes that they are performing a significant gesture against the act of war or whether they believe in the motive of companies is more of a commercial objective.
In fact, according to a report by YouGov, only 34% believe that companies that are deciding to pull themselves out of Russia by ceasing any trading are a sincere reaction to Russia's decision to invade Ukraine and start a war. One interesting data fact from this report is that the younger Russian public is more skeptical than the older public for the reasons for business-cutting relationships with Russia. It will be interesting to see whether these companies will continue to pull out of Russia for whatever reason they have or will they eventually come back to do business with Russia.
Financial Guidance
"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." - Robert G. Allen
Keeping your money in a savings account is not a bad choice. However, your gains will be minimal compared to other options like investing. While it’s good to keep some money in a savings account, find the right balance of saving and investing to maximize your potential profit.
Money Fact
The Secret Service, which protects the President of the United States today, was originally created to prevent the counterfeiting of US currency.