People are often tempted to give unsolicited advice to others about the best way to manage finances. 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 these bits of information might not be the best way to go about things and some of it may be very flawed.
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: Lots of people including you are not aware of how crucial it is to save money for your future. Typically, a consumer spends money when the paycheck arrives and tries to save a little bit for later on in the week. While this is preferable to saving absolutely nothing, there really is a better way.
Managing Personal Financies Properly
In order to assist you to save money for the future, here are some crucial tips for you to take account of. Many people are successful when they use these methods and they have really good results.
Ensure That You Save 20 Per Cent Of Your Earnings
Rather than spending first and saving later, turn this idea around. Set aside 20% of what you earn in savings, no matter how much money you make. You can use a savings account to keep this money separate, or even squirrel away cash. Whatever is left after the 20 percent has been saved can then go to paying bills, buying groceries and even getting yourself a new pair of shoes.
This will ensure that you budget in an effective way and keeps you saving for the future. Imagine the peace of mind that comes from having emergency funds in reserve at all times. It will give you real peace of mind to know that you have the resources you need to handle unexpected expenses when they arise.
The Simple Things
You may think the brand-new iPhone 6+ would be an excellent thing to have. Everyone you know has one and even your coworkers, but you still have last years model. There are many other electronic gadgets and products around, but unless you need one, you don’t have to have one! Ask yourself a simple question: “Do I really need this?”
What can that new phone do that your older one cannot? You can always reward yourself with luxuries, as long as you do not do this too often. The money that is being saved is going to come in handy.
Cash Over Credit
Maybe you are of the opinion that the credit cards in your wallet should be used, not hidden away. The call of the credit card can cause a great many problems for people who end up deeply in debt because they purchase inconsequential and perishable items with their credit cards. The thinking goes “That $30 dress won’t hurt, right? Especially if I can pay it back in a month or two.” But, allowing yourself to think this way can lead to serious accumulations of debt.
Make it a point to pay cash as much as possible. You only want to use credit cards when they are required. It can make more sense if you replace a credit card with a debit card.
Remember that being a rock star at personal finance doesn’t have to be hard. Break your old spending habits and create new ones.