Personal Finance 101: Breaking Terrible Habits And Creating Useful Ones
Taking care of financial concerns is a subject a lot of people feel qualified to give advice about. It is generally done with good intentions and in some cases might be sound advice, but usually the information is just too generic to be of real value. Using this type of guidance might not be the best idea, particularly since it is often inconsistent and riddled with errors.
So how exactly are you to handle your personal finances responsibly and avoid the loss of money by following flawed advice?
Saving money is critical for the future and should be a part of any good budget. Too many people spend the check as soon as it comes in or only save after spending. This is better than nothing but making saving part of your budget. This scenario is you spend the money you receive when the check arrives, then saving whatever is left after you spend. While this is clearly better than not saving at all, it is not a good plan for long term savings.
Better Strategies For Saving Money
Here are some tips to follow that will making saving money for the future second nature. Many successful people have found that this is a great method to use.
It Is Recommended You Save A Full 20% From Your Earnings.
Instead of the normal of spending your money and saving the amount remaining, you should do it the other way round. Take the first twenty percent of the money you earn and earmark it explicitly for savings. This money should be put aside by itself so that it’s not used. You should not be looking to spend this on a nice pair of shoes because you require this money down the road.
Saving money helps you create a healthy financial habit that will allow you to budget your money efficiently for the rest of your life. It certainly would be nice to have a bit of money when the next emergency pops up right?
Simplicity Is Key
The new iPhone 6 Plus sure looks great! Your co-workers and friends all have it, but your smartphone works just fine, so what’s the problem? There are many other electronic gadgets and products around, but unless you need one, you don’t have to have one! Think it again if you really need it.
Are there features that the newer models offer that your old one does not? It is perfectly fine to reward yourself from time to time, but you don’t want to do it all the time. Be sure to only spend money on luxuries when you have a bit extra to spare, and don’t ever take your spending money from your 20% savings.
Choose Cash Before Credit
You may have a new shiny credit card sitting in your wallet but, don’t use it. They will start off with buying little things with their credit card. A small purchase is not a problem if you can pay it off later, right? Wrong- when those small purchases add up, they build up to a big debt that might affect your finances.
Always use cash whenever you can. Pull out a credit card when there is no other option. A debit card is so much better than a credit card.
It is not hard to create a budget and stick with it. You just need to eliminate your bad habits and replace them with positive new ones.