Keeping your personal finances healthy can be challenging. As bills and other expenses start to pile up you may even struggle to meet any debt repayments, not to mention affording some of the luxuries that you undoubtedly desire.
While there are lots of different aspects involved in managing personal finances, if you are looking for a place to start, these five simple rules could prove to be transformative:
- Live well below your income
As you start to earn more, you will very naturally feel tempted to spend more. While there is no harm in doing so (as long as it isn’t excessive) – your personal finances will be far healthier if you live well below your income instead. That doesn’t mean that you can’t indulge yourself with a few well-deserved luxuries. You are free to indulge in them, but when you do so, you should curb your expenses wherever possible and ensure that you have as much as possible left over at the end of every month.
- Prioritize savings and debt repayments
Any income left over should go towards your savings or debt repayments. As a rule of thumb you should start by paying the minimum towards any debts you may have, and build up at least 6 months (or 1 year) of emergency savings. Once you do that you can then focus on paying off the remainder of your debt, and saving or investing.
- Be careful with credit cards
If you aren’t careful credit cards can land you in a lot of trouble – both by allowing you to spend beyond your means as well as landing you in too much debt to cope with. Insofar as possible you should try to pay off your credit cards monthly so that you aren’t charged interest rates, and never miss a payment. Assuming you are already having problems, you should pursue credit card help to deal with it.
- Make sure your money grows with investments
Aside from your emergency and regular savings, you should try to invest a portion of your income every month. That could be in a mutual investment scheme, pension plan, or in something else such as real estate or even stocks and bonds. When you do start investing your money just be sure you know the risks, and if you aren’t familiar with investing you should get help or stick to the safer options.
- Always be on the lookout for ways to pay less
Honestly you’d be surprised how much you could cut on your expenses simply by looking out for discounts, coupons, and other ways to pay less. Get into the habit of always trying to find ways of doing so, and you’ll be able to save more without making significant lifestyle changes.
Naturally, there are other key ingredients that are necessary for maintaining healthy personal finances such as a solid budget. The rules highlighted above should put you on course for all of that however, and let you make immediate changes that affect the health of your finances as soon as you do.
Article Submitted By Community Writer