People are often tempted to give unsolicited advice to others about
the best way to manage finances. You'll come across ideas that work and
get you places, but often people are offering up such generalized
advice. Trying to put together bits of information and use it in a
meaningful way is not usually the best plan, as some of the information
may be flawed and other parts confusing.
How can you take good
care of your money and your finances so that you do not end up
frittering away your savings on things you don't need?
Generally,
the problem is that most people lack a good understanding of just how
important saving for the future is. Most people are going to do
everything else with their money first before they even think about
saving. Although saving in this way is better than not saving at all, it
is in fact a highly ineffective way to build any kind of financial
independence or security.
Managing Your Personal Finances
If
you want to save money for the future, you'll want these tips to help
you on your plan. Many people who practice these methods are surprised
at how easy they are to follow.
Simply set aside 20% of your paycheck.
Just
reverse your spending and saving habits, instead of putting away your
savings after you spent what you thought you needed from your income.
Take 20 percent of your earnings first and put it towards savings before
spending it all. Make sure to deposit this money as soon as you get
paid. Whatever is left after the 20 percent has been saved can then go
to paying bills, buying groceries and even getting yourself a new pair
of shoes.
This method ensures that you'll have the cash on hand
that you need for your future and helps you to be more effective when
you develop your budget. It's a good feeling when you know that you have
cash on hand for emergencies.
Keep Things Simple
There are
too many people who are going to look at the latest gadgets and get
wooed. You cannot let others around you dictate what you are doing with
the money that is in hand. You want to buy the latest iPhone, but there
is something you must ask yourself. Think about it, do you really need
to spend the money on one?
Is there something in the newer model
that is not there in your present one? There is no shame in being
rewarded with luxurious items, but you need to keep it under control.
You should never forego important expenses to purchase luxuries, and
your twenty percent savings rule mustn't be violated.
You Want Cash Over Credit
Don't
fall for fancy credit card marketing. So many people end up with huge
debt due to starting to buy small items using their credit cards. It's
easy to get lured into the trap that a $50 purchase won't wreak
financial damage in the future because it can be paid off within the
month. Actually, once the billing cycle rolls around, you are probably
like most people who just pay the minimum amount of money towards the
bill, making that $50 dress cost close to $100 in interest.
Try to
use cash whenever possible. Save your credit cards for emergencies
only. Replacing your credit cards with debit cards is an even better
idea if possible.