Building Better Personal Finance Habits
Getting Rid Of Poor Financial Habits Developed Over Time
People are always offering unsolicited advice for all aspects of our lives, and it is no less true when it comes to managing our finances. While some of this information may be helpful and make sense, most of it won’t help at all and will be generic. Considering that a lot of this information might be flawed and confusing, applying pieces of the information might not be the best thing for you to do.
Yet, the question still remains: How then should you be managing your personal finances and stop losing money on things you don’t need?
The problem in a nutshell is that most people don’t take steps to save money for future needs. You may receive your check, spend most of the money, and save a small amount of it to hold you over until the next pay period. This may sound better than to not save anything at all, however, you should actually avoid this.
Managing Personal Finances Properly
If you wish to save some of your money for the future, there are some important factors that you should remember. Many of financially successful people have been carrying out these methods, and they have been awarded with amazingly great results.
Plan To Save 20% Of What You Earn
Instead of taking your paycheck, spending it on bills and expenses, and hoping there is something left to save, save your money before you spend it at all. You have to understand that at least 20% of your paycheck should be put aside and saved. You can either place it into a savings account or you can place it into a different wallet. The most important part is keeping faithful to that savings habit, and only spending after that initial savings has taken place.
When you start doing this, you are already headed down the right path with regards to your budgeting. It’s a good feeling when you know that you have cash on hand for emergencies.
Simple Works Best When It Comes To Finances
There are too many people that are going to look at the latest gadgets and get wooed. You see it everywhere; it’s in the hands of your coworkers, your friends, and your relatives. But you’re using a perfectly workable phone that’s got plenty of life left in it. While all of these new phones are quite tempting, you should not buy any unless you are really in need. Before you buy, ask yourself if you can live without it.
Can the new model really do that many things that your old model cannot? It is important to sometimes reward yourself with luxuries, just be sure this is something special and not one of those bad habits you do again and again. 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.
Cash Remains King
You sign up for credit cards so that you can use them, don’t you? Many people land in a sea of debt due to making frivolous purchases with credit cards. You may think A $50 dress couldn’t hurt, particularly if you can pay it within a month, don’t you? But, allowing yourself to think this way can lead to serious accumulations of debt.
When it is possible, make sure that you choose to pay strictly with cash. Save your credit card and only use it when you absolutely must, like in a true emergency. Replacing it with a debit card is even much better.
It’s easy to manage your personal finances and budget like this. However, you have to put an end to those old habits.