Top Seven Tips For Your Personal Finance Tips You Should MemoriesJuly 19, 2018
Everyone, even the smallest enterprise needs to account for income and expenses. Obviously, without competent management of finances, any business has no prospects. Personal finance also needs to be accounted for, whether it’s a family budget or a personal “purse”.
Most often, two categories of people apply to the topic of personal finance management. The first one is that they have free money resources over expenses for daily needs, wishing to properly dispose of them. The second – those who need to carefully plan the costs because of their limited number. However, this topic is universal for all and is the basic knowledge of the fundamentals of home economics for a long time.
Personal finance management solves such issues
• How to take control of your money?
• What additional financial sources can I connect?
• What waste is unjustified and purposelessly emptying your wallet?
• How to optimize taxes and other mandatory payments?
• How to plan an expensive purchase, save or take on credit?
• How is it better to dispose of free cash?
• How to provide yourself with a decent pension, and your children a good education?
With the help of various financial instruments, you can build your own investment strategy. Bank deposits, securities, real estate – are suitable for long-term investments with the purpose of additional income. Insurance companies, pension funds, mutual funds and investment funds will help to plan a pension.
Balance profits and expenses
Speaking in the language of financiers, everything that we have can be attributed to one of two categories – assets and liabilities. Assets are those that bring money, liabilities – what you spend them on. But not everything is so simple. If you have a car, it can be an asset or a liability. While you drive it, spend money on gasoline and maintenance, and then it is a liability. If you attach a checker to the roof and go to “tax”, then it will turn into a means of earning money, that is, an asset. If the money attracted by assets coincides with the costs of liabilities, then you go to zero and keep a fragile financial balance.
Get rid of debts
The holy rule of personal finance management says that you cannot accumulate capital until you get rid of debts. That is if you have a loan and you started earning more, then, first of all, repay the loan ahead of schedule, and only then take care of savings and investing. Cumulative insurance – will help you when you need a reserve fund for unforeseen needs. In managing personal finances, it is very important not to miss any possible source of income and profit from all available resources.
To become a prosperous person, one must have capital. So start saving right now. It seems that your monthly savings are negligible, but count how they will be in ten years? When the capital reaches the certain sizes, it starts to work on the owner. Here you can already choose – to make an investment in real estate, buy shares or choose other options for investing money.
Most people who seek financial well-being have sources of passive income. It is important to remember that having only one source of profit, we constantly risk being on the street in case of force majeure. If there are several of them, then we are always calm for the rear. Before investing, understand the question. To see advertising and thoughtlessly believe it is the same as giving money to the first person on the line. Iridescent promises from the bank about the huge earnings on deposits, of course, inspire, but let’s look at inflation and see that its percentage is higher than the percentage of the deposit.
Give up unnecessary expenses
There many items of expenditure that do not really do any good, but only impoverish us. If you are not rich, but at the same time you use the service for VIPs (elite beauty salons, boutiques, fitness centers), then it’s time to reflect – and do you live on income? And is it worth every weekend to go out with friends in an expensive sushi bar if you live in a rented apartment? Do you really need a smartphone from the latest model? It is better to spend them on better clothes, shoes, products, self-education, and improvement of living conditions.
Compare the proposals
Different specialists make completely different proposals, and it may turn out that repairing a car in a nearby salon will cost two times cheaper because there you will not be given a whole bunch of unnecessary services. You cannot know everything about everything, right? There are always people who take adequate money for real services, and there will never be a dirty source of charlatans trying to squeeze out the maximum from the client.
There are applications for smartphones and tablets, helping to count our daily, weekly and monthly expenses. You can, of course, do this on paper, but with the programs faster. Thus, you will understand which items of expenditure are spent on what amounts – for travel, mobile communications, communal services, clothing, household chemicals, office, cosmetics, entertainment, food, dog maintenance, travel, etc. For you, it may come as a surprise that the mobile phone “takes off” three times more money than you thought. Means – unprofitable tariff, means – to change.
If you spend more than you earn – then sooner or later it will turn into serious problems. But with the condition that profits exceed expenditures, it is possible to accumulate personal or family capital. Then it is necessary to find out whether all assets are operating at full capacity.
The key point in personal finance management is goal setting. Think about what kind of life you are striving for, what income you consider worthy of yourself, how do you imagine your old age, and what are you willing to give to your children? Personal finance management teaches you how to properly organize your personal and family budget, draw up a financial plan and calculate the stages of its implementation.