Personal Finance 101: Breaking Terrible Habits And Creating Useful Ones
You may receive a lot of advice from people regarding how to manage your finance regardless of whether or not you asked for it. There are going to be those ideas that make perfect sense, but then some are going to sound generic and just not based upon your personal circumstances. Trying to put together bits of information and use it in a meaningful way is not usually the best plan, as some of the information may be flawed and other parts confusing.
Still the question stands: What should you be doing to better manage your finances, and how can you avoid spending money on everything?
The primary problem in many people’s lives is that they don’t fully understand that it’s imperative to save money. This scenario is you spend the money you receive when the check arrives, then saving whatever is left after you spend. This may be better then never saving anything, but it is not the most effective approach to take.
Efficient Personal Management Of Your Finances
If you want to make sure you have money in the future, there are a few things that you may want to start doing. People that are successful have made use of this advice, and you may be shocked at how good the results can really be.
Ensure That You Save 20 Per Cent Of Your Earnings
Instead of saving whatever is left out, after you have finished spending, reverse the process. Regardless of how much you are paid, one-fifth of it should be saved for a later date. This can be done with the help of a separate wallet or better a savings account. Although 20% may seem like a lot to be saving, by taking it out first, you will find you are able to live on the remaining 80% after all.
If you make a habit of this practice, you’ll not only build up an excellent fund of emergency money, you’ll also learn to budget more effectively. It is always a good idea to have savings on hand in case there is an emergency.
Maintain It Simple
For sure, all those new electronic devices out there look nice, especially the new iPhone 6 Plus right? It seems like everywhere you look people have them, but keep in mind that you are not exactly due for an upgrade. The newest and latest products are always enticing, but you should assign your purchasing priorities based on absolute need, not a passing fancy. Question your need for it.
Sometimes, a newer model can be ignored because it is best for your long term success. Surely, there isn’t anything wrong with treating yourself with occasional luxuries, still limit it to a minimum. You should only be using your spending money set aside for these types of circumstances, and that should only be after you have given yourself the opportunity to save first.
Cash Is Preferred Over Credit
Once you have a credit card, it is easy to start to rely on it for everything. Many people end up in a financial quagmire because they start purchasing small things with their credit cards. Who doesn’t like the idea of going out and getting that $50 dress? This is so wrong because all those times add up, even when it’s ten dollars at a time.
Alway try your best to pay in cash. Credit cards should only be used when absolutely essential. A debt card is a great place to begin.
You can take control of your personal financial situation right now. Make sure that you have new spending habits that replace the bad older ones.