Personal budget

Sometimes doing a personal balance of your life is important, both from an existential and from an economic point of view.
If you want to manage your body, you cannot avoid to know what’s your weight. In the same way you have to do with your heritage.
All these considerations start from the hypotesis of an ideal heritage (the one compatible with your standard of living).

Heritage=static share+dynamic share

  • Static share: availability, theoretically, remains unchanged in the medium to long term. This share can be further subdivided into personal and investable share
  • Personal share: non-repayable (value=0) + essential share (objects that maintain some value, es. car) + additional share (all the object that have a value major of the one permitted by the standard of value, es. a beautiful car)
  • Investable share: the output of all the considerations (the content of your current account – dynamic share, decided by you)
  • Dynamic share: the sum of liquidity for the very short term (liquid assets) plus an unforeseen fund (10.000÷50.000€)
  • Liquid assets: the necessary liquidity is equal to the expenses of at least three months

General rules:

  1. The necessary liquidity is equal to the expenses of at least three months
  2. The dynamic share must have maximum liquidity
  3. The non-repayable portion must be minimized in percentage terms
  4. In the personal static share the essential part must be little perishable
  5. The additional share must be minimum for assets that lose value
  6. The additional share may be significant for goods that purchase or do not lose value.
  7. In evaluating their investments, only the additional (6) and the investable share must be considered.

ciao

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