In order to have a good head on your shoulders about money, it’s important to know the basics first. Being smart with your money knows where to set limits for yourself, and what moves to take in order to prepare yourself for the future.
Money is something that should be seen in the long-term vision, rather than just in the moment. When you are able to take control of your money and confidently say that you know what it takes in order to plan for your future while taking care of what needs to be done today, it’s a great feeling. Ready to get started with the basics? Here are the golden rules of money management to get you started.
Always Have Savings Account
It’s important to always have a backup plan if something goes wrong. When you have a medical emergency or need to take care of your home by making unexpected repairs, it’s a huge relief to know that you put some money to the side in order to be able to fund it.
A general rule of thumb when it comes to saving money is to put away at least 10% of every paycheck. This way you won’t see a huge chunk come out each time, but rather a small trickle that eventually starts to grow and grow. You won’t only just have a great sense of satisfaction when you look at the final result of your savings efforts, but you’ll be relieved to find that you have extra security in the event of any emergencies.
Set Up Auto Payments
One of the easiest ways to waste money is to forget to pay a bill. When you forget to pay then you are hit with a late payment fee, or an insufficient funds fee. You may as well be burning your money and throwing it out the window.
The best way to eliminate the risk of forgetting to make payments is to sign up for auto-pay. This way everything is done for you without needing to worry about accumulating fees.
Don’t Live Beyond Your Means
Many people don’t have the best self-control. When you aren’t able to recognize when something is too expensive for your lifestyle then you may have a problem with self-control. In order to ensure that you make the best decisions for your financial future, you should be constantly making an assessment of how well you are doing at your spending patterns.
People who take out credit in order to pay for something that they want but don’t need are setting themselves up for a mountain of debt.
Remember to never take out more than 30% of your total available credit.