- Personal Finance
Getting Smart With Money
One of the major benefits of the recent economic melt-down is people have realized the dangers of making wrong financial decisions. But whether they have learned the right steps to manage their financial affairs is still a big question. The point is 'now' is the right time to learn to get smart with money so they need not face the same hardships they were subjected to, not long ago. Some of the following tips may help:
Begin Setting Budgets Every Month
The foremost step for getting smart with money is to start setting your budget month after month. You can not assume that all your financial woes will come to an end once you start making budgets. But at the same time, you can not deny the fact that budget is a great tool that may help you spend your money judiciously.
Track Every Expense You Make
Your budgets will be useless if you do not pay close attention to how you spend your money. Unless you know where your money goes, you can never get smart with your money. If you start tracking your expenses, you will find that not only major expenses you incur but even the small purchases you make can negatively impact your overall-spending.
Begin Building A Fund For Your Emergency Needs
You may suddenly face situations when you may not be able to earn money. Though this may be temporary, you can not lead a comfortable life without money. So, you must start building a fund for emergency situations. Such funds may also be useful when there are sudden medical expenses, when you have to send your children for higher education and so on. But remember, you must not misuse your emergency fund for buying the latest TV or a fancy car. Another point to remember is you must be able to access this fund easily and instantly.
Never Borrow Beyond Your Capabilities
Before you borrow money, you must seriously consider whether you will be able to service the debt comfortably. Excessive debts may mire you in serious troubles. It is better to avoid going for debts even if you are financially comfortable and are confident of servicing them.
Do Not Succumb To Lifestyle Inflation
Lifestyle inflation may land in you in serious trouble. If you compare yourself with your friends, relatives, neighbors and co-workers and try to buy whatever they buy or have, you will be ruining your finances. Therefore, refrain from keeping up with the lifestyle of others. You must evaluate every purchase you make on their merits and decide if they are essential items or non-essential ones.
Set Meaningful Financial Goals
There is no point in setting financial goals and falling by the wayside. You must therefore set meaningful and achievable goals. If you set impracticable goals, you may lose your focus or get demotivated soon.