While hiring someone to take care of your finances is a completely viable and understandable option, there is no one who can really fully replace you here – personal finances are personal for a good reason. No two individuals in the world are in the exact same financial situation, so knowing how to get back on track in terms of your finances is absolutely vital. Abiding by these 10 simple rules of personal finance will help you in that, and even in understanding your wallet better.
Designate the “untouchable” part of salary
There is a difference between putting your cash into the rainy day fund and actually growing your savings with each coming paycheck. Set aside a portion of your salary for the “untouchable fund” and seamlessly boost your savings.
Of course, the “untouchable fund” is only an addition to your retirement savings, which deserve 15% of your gross income at the very least. Although 15% might seem too much, the amount is well worth it, seeing as how the retirement landscape has gone through changes recently. So don’t be afraid to gradually build this sum towards the 15% and even beyond.
Financial independence instead of retirement
Sure, you might’ve always planned to proverbially (or literally) ride off into the sunset when you make it to a certain age, but this shouldn’t be your real goal – the real goal is getting to a point where you don’t have to worry about money anymore. Just keep this in mind.
Wants and needs aren’t the same thing
Believe it or not, confusing what you want for what you need is one of the biggest money guzzlers out there. Naturally, this doesn’t mean that you shouldn’t indulge in what you want (after all, this is essential for happiness), but it does mean that you should primarily focus on what you really need. Food, shelter, health care, clothing and the like are human needs, everything else is leaning towards luxury.
Understand your investments
Going blindly into “the sure thing” is exactly how con artists and cheats earn their money. Although the investment business can truly make you rich in less than an hour, this is a rare occurrence for a reason – investment success requires knowledge, discipline, clear thinking and, most importantly, consistency over time. If you want to get into the investment business, don’t do it on a whim.
Don’t get discouraged
There are many cool ways to actually boost your finances, don’t let the paragraph above discourage you from investing. What is important is that you set your goal and start doing your own research – read books, dig through the internet and get familiarized with the investment world. Investing a portion of your wealth into a well-researched asset is an excellent way to make some money.
Always earn more than you spend
With a single day job, you can’t really hope to boost your earnings, unless you get a promotion or start working ridiculous overtime. However, there are many ways to earn money on the side. Although part-time professions such as content writing, web design, and online teaching are excellent ways to boost your finances, doing paid surveys from home takes less time and effort, while it boosts products/services that a company offers. There’s always a way to earn more.
Never spend more than you earn
This, sure enough, seems like a completely basic piece of advice, but it really comes down to the right mentality. It is easy to get distracted, saying “oh, what the hell” and spending more than you can really afford, but this is a recipe for a disaster, as it will lead you into the painful world of debt.
Paying off the debt
Assuming that you get to the point where you owe money to someone, always pay the highest interest rate loan first, regardless of how big (or small) it is, and regardless of who you’ve borrowed it from (bank, government, or family).
Do your taxes at least once
Yes. Our tax system is insanely complicated, much more than it should be. As a general rule of thumb, you should always seek professional help for doing taxes, but you should also know the ropes, seeing as how no one can understand your finances better than you. Do your own taxes at least once, so that you learn how it all works. Knowing where to look will both boost your finances and make the tax expert’s job much easier.
Repeat these 10 rules of personal finance often and always have them in mind as guidelines for the complicated world of personal finance. Whatever you do, avoid debt and unaffordable luxury purchases, and pay attention to things such as your taxes, your retirement money, earning on the side and your general savings.