While we spend a lot of time in school or college, picking up various tips and tricks that are designed to get us through life easier, managing our financial situation is often overlooked. This is an enormous oversight as good financial management is such a vital skill that can carry you through life. Even if you do not make a huge amount of money, what you do with it can make all the difference. So, in a small effort to help out, the following blog post detail a few top financial rules that you can follow for life. Essentially, getting into these habits now can be highly useful in living a life that is more financially stable, which can prove to be the springboard for so many other good things.
Live Below Your Means
No matter how much money you are earning, living below your means will ensure that you always have something left over at the end of each month. In our modern society, we are often encouraged to spend beyond our means, which can result in you falling into debt. If this has happened to you, it is certainly worth dealing with the problem head-on, so look into news about debt lawsuits. Living below your means is enormously stressful. It can also end up with you acquiring a load of things that you do not want or need. So, even as you move through life and start earning more money, you should still stick with the mantra of living below your means.
Save a Percentage of Your Salary Every Month
It would help if you got into a habit of putting a certain percentage of your salary away into a savings account every month. Around 10 percent is a figure that many people suggest, but you can move this up or down depending on your current financial situation. First of all, your savings give you a safety net that ensures your financial stability if something should go suddenly wrong at some point down the line. This can also help to compound the interest, which results in you having more money at the end of the day when you need it.
Keep an Eye on Your Finances
A major problem for many people is that they simply do not track their financial situation closely enough. A lot of people do not look at it all. If you do not know where you are at financially and where your money is going every month, this could result in major difficulties. So, make a habit of reviewing your financial situation regularly, and if you need to make adjustments, you should do so quickly and efficiently rather than allowing your financial situation to get out of control. Keeping an eye on your finances leads you comfortably to the next point…
Make a Household Budget
For a lot of people, making a budget is a bit of a ‘square’ thing to do, and they can survive just fine without one. However, without a budget, your money could be disappearing, and you have no idea where. Worse still, you have no idea what to do about it. While you do not want to create a budget that is so austere that you do not have any fun in your life, you may be shocked by how much you are spending. While buying a daily sandwich may seem like nothing on its own, when you tot up how much this amounts to, you may well find that you are shocked! A household budget is also useful for identifying other areas in which you are spending too much. For example, you may see that you are spending a lot on your car insurance as you have let the bill renew automatically rather than switching providers every year – or at least telling your current provider that you can get a better deal elsewhere!
Set Yourself Clear Financial Goals
People tend to work better when they have clear financial goals to work towards. These can help to keep you on a clear path that does not result in your overspending. For example, you may aim to have enough money together for a mortgage within five years. This long-time goal is great to have, but you also need to break it down into more manageable monthly – and even daily goals. How much are you going to need to save regularly to achieve your eventual target? From time to time, it is nice to give yourself a little reward that is a reflection of you continuing on the right path.
Learn to Talk About Money
The problem with money is that it has become something of a taboo subject. People are embarrassed to say how much they are earning. People are ashamed to say when they need financial support. However, this is a dangerous and damaging attitude to have as it can lead people to get into difficulties. Building up a sense of financial intimacy with your partner can go a long way towards ensuring that you have a financially fruitful life. Unfortunately, on too many occasions, people are afraid to say to their other half when they get into debt or make a poor financial decision. However, having difficult conversations should not be avoided and can be ultimately invaluable.
Discover Investment Opportunities
The stock market can be a highly intimidating prospect for people who have never thought about getting involved in it before. However, this should not be the case. The more you learn about something, the more accessible it instantly becomes. There is a wealth of information out there online, and it makes sense that you should immerse yourself in the knowledge. There are also platforms out there that allow you to start off using ‘play money’, so you do not have to worry about making too many major risks. You could also look at what other sorts of investment opportunities are available. For example, getting involved in property investment is a popular route for many people to go down.
Maximize Your Pension Contributions
No matter what stage of your career or life you are currently at, it is worth thinking about the pension contributions that you are making. It is often in your best interest to start up a pension fund, which is simply down to the fact that your employer contributes towards it as well. If you maximize these contributions at an early opportunity, you can compound the interest and put yourself on the firmest possible financial footing at the earliest possible stage.
Prepare Your Life Insurance and Will Situation
Just as we talked about money being a taboo subject earlier on, the same is true of death. When you get the two combined, it can be an absolute nightmare! However, putting in place a strong plan for your loved ones is worthwhile to ensure that nobody is left in the lurch financially. A big part of this is getting a life insurance policy that gives protection to your family. Another big part of this is making a will which outlines what you want to do with your money and assets. This can help to prevent any major disagreements and difficulties after you have gone.
While there are plenty more financial rules for life that are likely to be highly useful to follow, these ones give you some of the basics that ensure you stay in a strong monetary situation, which is beneficial to both yourself and those who are closest to you.