The vast majority of people are financially illiterate. This is used by interested individuals from the top, banks, credit organizations, scammers, sellers, and many others. Today we offer you a list of short, simple, clear, and very effective rules of financial management that will help you daily in life.
- Spend less than you earn
If there is a key fundamental rule of doing finance, it is this: your expenses should be less than your income. You MUST follow this rule, otherwise, your entire future life is put under a big question.
Get into debt and live on credit because “everything will be fine”? That’s what the people who give you loans say, and they really will be fine.
And you? You have accumulated debts without making any savings. Only a miracle will help you find financial well-being with this approach to life. Do you believe in miracles?
- Simplify your financial life
The more loans and credit cards, the greater the chance of not noticing the loss of funds or missing the next payment. The more deposits and accounts, the more difficult it is to keep track of them and it is easier not to have time to react to emerging problems. The more complex your financial life is, the more time and effort it takes. Along with this, the chance of getting confused and making a financial mistake increases.
- Never let the “future self” control the situation in the present
Do you want to buy something that you can not afford now because in the future you will receive more and easily pay off your debts? Most likely, you will regret this decision for a very long time, because your “future self” may receive the same or even less, or even lose your job altogether.
Even if your financial situation improves in the future, there will be other expenses that will not be so easy to cope with and without the mistakes of the past.
- Create a budget, do it right
A budget is the best way to control and plan your finances, but only if you take the right approach.
How does a smart person plan their budget? It does this based on spending statistics for previous months. That is, you can fantasize and say to yourself: “So, well, I’ll spend that much on groceries and no more.” But then the harsh reality will come and put everything in its place. It is better to rely not on assumptions, but real spending statistics.
You keep expense statistics, don’t you? It will help you not only plan but also find items of overspending.
- Optimize all your planned expenses
We get a lot of invoices. You can start at least with the same services of a mobile operator.
Do you need all the connected paid features? Here 10 dollars, there 20 dollars, 100 dollars somewhere else. The total amount will be very decent, and you just give it all away every month. Such a general cleaning is useful to do every few months.
- Calculate your real earnings
Deduct from your annual earnings the tax and all expenses directly related to work, including lunch outside the home, work clothes, and similar things. Then count how many hours a year you actually spend on work, including all overtime and finishing work from home. Divide the real income by the real number of working hours. That’s how much you actually get for an hour of work.
- Use real earnings as a unit of measurement for all purchases
Now it will be much more interesting to buy.
The purchase price becomes the numerator, and the real earnings become the denominator.
This app is equal to two hours of my life. Is it worth it? Is this TV worth two months of life? Maybe we should take the smaller one over there. Now you can always answer your question: “What am I spending my life on?”.
- Don’t pay attention to how others spend their money
Do you have the idea that this person is better than you, because he is driving a sports car, and you are not? You don’t have to spend money on things that other people like. Spend it on what you like.
- Spend one hour a week analyzing your finances, career, and life
The more often you review your current situation and position, the more likely you are to detect discrepancies with your goals early. Analyze the events that have occurred over the past week. Think about the week ahead.
Does everything fit into the concept of your long-term goals? What is your greatest achievement this week? What was wrong and why? How to avoid this in the future? Are your long-term goals as desirable to you as they were before?
These rules are of great use to young people, students, who only start making money and plan the finances. While financial education is crucial for students, some of them struggle with academic writing a lot. In this case, they can contact essay writer help to get help with the style, structure, or any other aspect of academic writing.