Personal Financial Rules
While you go through your early years of schooling, you do not receive the right knowledge of finance and personal money management. All you are told to do is complete schooling, get a job, and that’s it. Unfortunately, life is not that simple. Hello, and welcome to my blog. If you would like to learn about personal financial rules and the importance of maintaining a good financial future, then this post is for you. Without any other delay, let’s get to it.
The Ten Important Financial Rules
Unnecessary college debt: You don’t need to incur debts in obtaining a degree from the college. With many complaints from graduates about school debt, you can begin from working for a few years. This way, you save up even if it’s just ten per cent of your schooling fees.
Safeguard your health: Paying visits to the hospital for treatment can cost a lot of money when you’re not insured. Even though it’s difficult to keep up the monthly health premiums, you know that emergency medical needs are covered. If you do not have a medical cover, get one and ensure you safeguard your health by engaging in daily exercise, eating good foods, avoiding excessive drinking, and not smoking. This will help you to have a lot of money saved.
Taxes: To be on the right side of the law, you must know how taxes worked out. Before getting your first paycheck, try and calculate the money that would be left. This will help you to know what can be done and can’t be done.
Insurance rules: If you have someone who financially depends on you, then you would need to take insurance. It is better to have a term policy than life policy so that when there is no one financially resting on you, you can end the policy. You can take umbrella insurance or life insurance, which covers your properties too. Compare the rates before deciding on which insurance company to insure with.
Secrets of credit: A lot of people do not know the importance of credit scores when they are given their credit cards. It is important to have and retain a good history of credit cards. Your credit scores have an importance in your financial health. Generally, it determines your financial position. When you have a proper score, it would be easy to purchase a house, car and other luxuries and have other milestones achieved later in the future.
Points for proper credit score
Get a credit card: You must get a credit card and use it so that when you need to take a loan, it would be approved. Financial institutions will have your transaction and payment of interest recorded in your name. Your score will be the determinant of the loan amount you can take.
Timely payment of debt: When you need to settle a debt on a particular due date, ensure that you pay on the due date.
Compound interest: Setting aside a little amount of money into a High-Interest account will yield more money than you think. This will compound into more money than the initial amount deposited. Enjoying compound interest will help you to have your wealth grown depending on the number of years you leave it to accumulate.
Budgeting: When you have a major understanding of budgeting, you will formulate a difference between wants and needs. This will help you to monitor how you spend. You can make use of a Tactical Budgeting which centres on long planning. This will assist you in preparing the budget for what you need in the months to come. By doing this, you can have the amount you have budgeted for your wants and needs saved into different accounts to avoid spending the real budget.
Emergency fund: Do you know what having an emergency fund is about. It means that you should have enough saved up to survive for at least six months. Naturally, it should be six months of your monthly income or at least $400. This money will be a back up for when things don’t go right like during the 2020 pandemic or if you lost your job.
Saving: The regular savings norm is 10% of your monthly income, now, except you are earning millions that won’t be a great gain for you to retire on. What you will need is at least 30% of your income saved to be able to make a mark in your future. But its not just saving, it’s also about saving with the best profit to you. Find high yielding savings account for this job. Another point within this to understand is you can save well if you choose to cut down your expenses. Check out my blog post on ‘minimalist living‘ to help you.
Acquiring your first home: The usual norm of owning your first home would be to have a 20% down payment to at least get the mortgage loan. If you can’t afford to, then you are left with private investments and their expensive costs. Now, this could look like a wise point but then take a look at it from this angle. Real estate keeps appreciating, but wages don’t improve so much each year. This means that you keep saving for a target that will keep on growing each year. In this light, if you can afford to save a constant amount for five to ten years for your first home then why don’t you channel those savings to paying off the private loan you would collect.
There is a lot to understand that is not learned in your basic days, but then it’s never too late to understand this point. Take the initiative to continue working out your financial future. You can learn more about financial freedom by reading our post ‘how to become a millionaire‘ to get more financial freedom benefits. If you enjoyed this post about financial rules, then leave me a comment, also like and share my post. You should also subscribe to get more of my posts.
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