Arkhat Zhumadilov hails from The Woodlands, located in Montgomery County near the city of Spring in the great state of TX. He has spent many years in the financial field and wants to help others understand the four major areas of finance that are also sometimes referred to as the pillars of finance.
No matter what your income or level of wealth is or the number of investments you have made or even the amount of credit card debt you have, Arkhat Zhumadilov said that your personal financial situation will fit into a very common framework that is referred to as the four pillars of personal finance. This means that everyone has four basic characteristics within their financial situation, which include assets, income, debts, and expenses. He said that by measuring and comparing these components, you can actually determine the state of your finances and even your overall net worth.
Assets and Liabilities
Arkhat Zhumadilov said that while everyone enjoys having assets, literally no one likes having liabilities, but they are both very important elements of your financial position in the world. The difference between these two elements actually determines your overall net worth.
Assets are basically anything that you own that has value that could be turned into cash if you need it. These assets can include the money you have in your personal savings or checking account as well as life insurance policies, retirement plans, land, jewelry that is valuable, and even equity in your home.
Your assets can be used at any time throughout your life and can even allow you to improve things throughout your life. For example, you could use the equity in your home to pay off high-interest credit cards or to cover some emergency expenses.
Liabilities
Liabilities are basically the same thing as your debts since you’re obligated to pay someone else that you owe for them. These things can include the mortgage on your home, the loan for your vehicle, the amount of money you owe on credit cards, taxes that you owe, and even student loan payments. Arkhat Zhumadilov stresses how important it is that you have good credit throughout your life because it will affect how much money you can borrow and how much money you will have to pay back. This means that the lower your credit score is, the higher amount of interest you are going to pay.
Income and Expenses
Arkhat Zhumadilov said that both your assets and your liabilities can provide a lot of information overall for your financial health. Tracking your income, as well as your expenses, can help you to understand how you spend your money on a day-to-day basis. He said these numbers are very easy to track and obvious since it’s all about the money you make from the money that you spend on a daily or monthly basis.
While it is always good to strive to increase your income level, Arkhat Zhumadilov said it is just as important to try to pay down the debts you have so that the income you make will be freed up to be saved for future expenses.
Being in debt can have a detrimental effect on your overall health and well-being, as well as your quality of life. Arkhat Zhumadilov said that by getting a handle on these four pillars of finance, you will be able to have a much brighter and better future.
