How To Make Your Personal Finances Work
How to Understand Basic Finance
Understanding basic financial principles is not that hard. It gets easier if we put away our preconceived notions that examining our finances means we have to buckle down and have no fun at all!
Once you understand basic finance tenets, you actually can lead a very happy and successful life and a life rich in one key ingredient - freedom from worry about debt, freedom from worry about your financial future.
Learning the ins and outs of basic finance and how it works can give you the freedom you've always wanted simply because you now will know that you can afford something and you won't have to fret about the reality of not being able to afford it later!
The Rules of Basic Personal Finance
Let's take a look at some very simple facts of life when it comes to basic personal finance.
Applying these simple 'rules' can save you headaches in the future and teach you to get better and better financially until you're at the peak of your financial health and wealth.
Please add more tips and ideas at the end of this hub to contribute further to this article.
We can never learn too much about how to understand basic personal finance!
1. Don't spend what you don't have. Your expenses cannot be more than your combined income or you will always be in debt.
2. Check your self worth. Are you
making what you should be making? Find
out what other people in your profession are making and make sure you are in the
ballpark based on your job performance and experience. If your current job isn't paying you enough, start investigating other
3. Upgrade yourself. If you're lacking a degree or a certificate and it means a significant increase in wages, do what you need to do to make yourself more marketable.
4. Get it down on paper. If you don't
have a budget, make one. If you can't do
it yourself, buy a program. If you don't
have a list of what you're spending money on, you won't see the changes in
spending habits or places you need to cut back. Start tracking your spending!
5. A penny saved. Make sure you're
setting aside money in a savings account that is drawing interest and do it
religiously. Cut out other things but
don't cut out your piggy bank. Recommended is 5% to 10% of your salary. If you're not disciplined, have it automatically withdrawn and best yet,
have it in a separate account. Sign up for a higher interest drawing on-line account (it'll earn you 5-6 times more in interest) and they are insured by the FDIC just like bricks and mortar banks.
6. Reduce the plastic. Pay it off and become disciplined enough to use it and pay it off every month - or don't use it! This is the single most success defeating aspect of personal finances - credit card debt.
7. Do the math. If your job has medical and dental benefits or a retirement plan like a 401(k), take advantage of them. Add up what you will pay out of pocket or what you'd have to pay if you got your own plans. If your job has them and it's affordable, jump on it. They get group rates while we 'regular' folks get individual rates.
8. Insured enough or over-the-top. Evaluate
your insurance needs for life and disability. You want to protect yourself but you don't need to throw away your
money. Make sure your insurance is the right kind for your needs - and the right price!
9. Make a will and a living will. Make sure you take the time to make a will if you have dependents. If you have a simple situation, use a will program to save money. Having a living will in place will save you thousands of dollars - if you do not want to have procedures done on you should you be incapacitated.
10. See a bean counter. It's best to
keep your own accurate records but if you find you need help, there are
accountants who can give you advice, especially on tax deductions and
additional ways to save you money.
How To Understand Basic Personal Finance
We all know these principles to be true but how often do we take the time to think them through and make sure our financial life is up to snuff?
Taking a bit of time to reevaluate your personal finance situation from time to time is a good idea even if you think you're at the top of your game financially.
There are always corners to cut or things we can readjust to make our financial machine run even more smoothly.
If your financial plan isn't where you'd like it to be, think about some of the ideas above and more than that, take action. What you do today to get your financial house in order, you'll not have to do tomorrow and you'll be on your way to financial success and most importantly, financial freedom.
Again, if you have personal finance tips, tricks and ideas, please comment below and enrich this hub!
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