If You Want To Improve Your Personal Finance You Have To Make New Habits And Break Bad Ones
Taking care of financial concerns is a subject a lot of people feel qualified to give advice about. Some of the advice given might seem sensible, however most of the information tends to be quite generic. It is not the right thing to do to apply all this information, as some of it can be flawed and quite often, confusing.
Yet, the question still remains: How then should you be managing your personal finances and stop losing money on things you don’t need?
One of the main problems encountered in successful financial management is that many people (perhaps you are one of them) don’t understand how important it is to put some money aside for later use. It is common for those that do save, to use their salary as it comes and if something is left at the end of the month, then save that amount. Although saving in this way is better than not saving at all, it is in fact a highly ineffective way to build any kind of financial independence or security.
Effective Way To Manage Your Personal Finance
You should always be looking to save money moving forward. Many people are successful when they use these methods and they have really good results.
Save One-Fifth Of The Money You Earn
When you get your paycheck, instead of spending first and saving whatever you have left over, do it in the reverse. You want to make sure that you are saving at least 20% of your earnings moving forward. When you cash your paycheck, put the 20 percent into a savings account. What you spend wont matter as long as you have set aside the 20%.
With this method, you are assured of effective budgeting of your money while giving you a chance of keeping something for the future. If an emergency comes up, you will have the security of knowing you are ok.
Keep It Simple
For sure, all those new electronic devices out there look nice, especially the new iPhone 6 Plus right? All your friends and co-workers have it, however you purchased an iPhone 5s fairly recently. While it may seem exciting to consider the new features and to fit in with friends by getting the same as they have, it is important to learn restraint and only buy something when you really need it. Do you really need it?
What things can the new model do that your current one isn’t able to do? There is no harm f rewarding yourself with luxuries from time to time, but make sure you keep it at 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.
Oh those shiny credit cards look pretty and they’re meant to be used and not just take up space, right? People often accumulate massive amounts of debt by using their credit cards to pay for all sorts of small expenses. It won’t hurt to charge a $50 dress, especially since you can pay it off in one month, right? But, allowing yourself to think this way can lead to serious accumulations of debt.
Using cash as much as possible will help to curb this tendency. Only use a credit card when you absolutely need to. Alternatively, you can replace it with a debit card, which is a much better option!
Management of your personal finances and budgeting is very easy. In fact, it is a matter of breaking old habits and forming new ones.