Are you following the golden rules of personal finance?
How good are you at managing your finances? Are you following the golden rules of personal finance? If you aren’t where you’d hoped to be financially speaking, maybe it is time to head back to the drawing board and tweak your financial practices.
Here are some basic rules for personal finance to help you reach your goals.
Build a budget the smart way
There are a number of ways to approach budget-setting, but one of the recommended ways is to follow the 50-20-30 rule. 50 per cent of your take home pay should go towards your living costs and bills (i.e. rent/mortgage, utilities, food, debt payments and transportation); 20 per cent should go into savings; 30 per cent should be allocated for discretionary spending (i.e. entertainment, travel, clothing, etc.).
If your current budget doesn’t allow for this split, it is a good idea to re-allocate your spending or cut back on your debt load.
Maybe the reason that you haven’t achieved your financial goals is that you haven’t identified what they are. State your goals specifically so that you can devise a plan to get there.
Spend within your means (or even better, below your means)
The best way to avoid a debt problem is to avoid accumulating debt in the first place. Commit to spending within your means, which means changing your attitude towards spending and credit. Don’t impulse shop or use credit cards as a way of extending your budget. And definitely don’t use credit to cover your monthly expenses.
Pay yourself first
Good money management begins with saving. It can be hard to find money for every month to save. Hey his is a much easier habit to establish if you make it seamless. Set up automatic savings from your paycheque; you won’t even notice the deduction but you will notice your savings growing.