Most of us would be interested to know if there are any personal finance rules to follow to attain financial freedom. And the good news is, yes there few rules that can help you manage your finances in a better and organized way. Managing your finance efficiently is a struggle for most of us. But it is very much important to manage your finances properly or else the repercussions can be gruesome. Initially, you might just worry about not having savings but it can also lead to an imbalance in your retirement phase.
Handling finance properly is not a day’s job and it comes with practice. Once you get started with managing your finance in a better way then, you can explore other ways to boost up your savings. As you become a pro, you can create your own personal finance rules to add to the list as well.
We share with you 5 Personal Finance Rules that would help you to handle your finances in a better and efficient way. These personal finance rules are like a guide to show you a path to manage money and as a result get a groove of some dollars in your account. Savings add financial security to your life and give you the confidence to face any financial situation.
5 Personal Finance Rules to follow to get started:
Rule 1. Cut down on unnecessary things and add that money to your savings
The first personal finance rules to follow is starting saving as much as possible and start it now. Every month after you get your paycheck, you will clear off the necessary bills and make essential expenses on housing, food, and utilities. Keep some money for your transportation and other important stuff. Now, analyze what you generally do with the money left. If it is spent on unnecessary things that you can cut down then, think what you can do with the money left.
The best thing to do is put at least 50% of the money left for your savings. This will be a good kick start and it won’t pinch your budget as well. In few months, you’ll realize you’ve built your saving nest already and you just need to boost it up.
Rule 2. Look for investment options
One of the best ways to handle your money is to invest it wisely to get the best returns. For beginners, you might always feel the risk of losing money and unsure of which option to go for. As there are lots of different ways where you can invest and choose based on the risk level such as mutual funds, stocks, peer-to-peer lending etc. For beginners, you can opt for investing in small number and with a low risk through various options. Even a small investment will give good returns in the long run. You can do a research online or check with a reliable financial advisor for more details.
Rule 3. Never encourage credit card debts
Having a credit card debt can be alarming as most of us use a credit card for non-essential purchases, luxuries and impulse purchases. Paying interest for those things and having debt can affect your credit score.
But, wise use of credit cards can be beneficial as well. If you clear your credit card bill on time and use it to the amount that you can repay, then you can have a good credit score.
Rule 4. Get thoughtful about your regular expenses and pay full amount only where it is necessary
You need to keep a track of where all your money goes on a monthly basis and so, start by analyzing your expenses. For the regular purchases, check for coupons or discounts available. Wait for the year-end sale for any major purchase.
Rule 5. It’s your money so make every move meaningful
Set a budget for everything you buy to be it a house, a car or grocery. It is important to know your affordable limit and make every purchase meaningful. Even if you can afford a larger home, a new car etc. you don’t have to buy it when you are already comfortable with the things you have.
By following the 5 above mentioned personal finance rules, you will be able to set yourself in the right direction for a better financial future. It’s okay to slip occasionally from the planned schedule sometimes, but you need to know how you can set it right. You make a small unplanned purchase which refrains you from saving the set amount for the month; don’t worry you can balance it the next month. Handling personal finance efficiently is a learning process and when you start saving more than you spend, then, you will know that you’re on the right path already.