Financial Advice that is Easy to Comprehend and Apply
One thing in this world that comes free is advice be it financial advice or about life in general. However, most of time the unsolicited advice is worthless and financial advice from a qualified financial advisor is of much value
Here are a few tips to manage your finances effectively and with minimum fuss.
First, Pay Yourself
Always set aside an amount from your paycheck for future goals or unexpected emergency.
If you are serious about savings, keep a track of how you budget. A good saving plan is not to save what is left after spending; instead, spending what is left after saving. Budget for your rent, bills and basic needs; and then figure out your saving amount. The amount left now is spending money.
Following this advice can be hard for cash-strapped people, but is sure to pay off in the long run.
With this habit you’ll find that you are forced to adjust your expenses and save money at the same time.
We don’t save enough for emergencies. We have a prejudiced view about personal finance.
Tip: To do this, set up automatic monthly deposits to your savings account. You don’t even have to think about it.
Know where the money goes
Sounds like a no-brainer? Most people don’t know how much money they have going out and coming in. There is no need to track each dollar, but should have a basic idea of money coming in and going out.
Make sure your expenses are not exceeding the income. Budgeting is the best solution for this. Once you start budgeting, you will realize that making small changes or adjustments in everyday expenses can have a big and positive impact on your finances.
Tip: Always maintain a record of your expenses and income.
Frugality is not about cost-cutting
“Spend less than you earn” is a simple finance rule. But now, the rule is: “Earn more than you spend”. It’s smarter to get rich slowly rather than living poor comfortably.
We always get lectures on frugality, on how we should cut down the expenses. But frugality can’t make you rich. If you want to live a rich life, spend money on things you love.
There is always a limit on how much you can save, but there is no limit to your earnings. The idea here is that there are opportunities in the market to earn money rather than saving $3 on Latte. Even with the increased income, it is important to learn how to manage money for financial success.
Tip: Have a powerful combination of earning more and manage expenditure.
Be disciplined and not emotional
Emotions can be our worst enemies while taking a strong financial decision. If your financial decisions are driven by emotions, you may meet the consequences in your own inconsistent.
Most people fail to understand how their emotions affect their financial decisions; however, studies have shown that human behavior is the detrimental force that impacts their finances.
To accomplish the goals, you need discipline, so that you can stick with the plan and be prepared for the profits and losses. Don’t just let emotions get in the way. Any financial decision you make, should be based on sound financial plan. Avoid impulse buying. It is a dangerous behavior that can hinder your financial success.
Tip: Beware of your emotions; follow a well-designed plan that will keep you on track to reach long-term financial goals.
You don’t need any special degree or Wall Street advisor to manage your finances. Apply these simple yet effective advices for your life and you can be as successful as any Harvard MBA guy!