Personal finance is still not a subject of high school or college; hence no one pays attention towards it. Most of us are clueless about how to manage our money. Most of us think that managing finance is not their cup of tea. If you are one of them, I want to tell you that you are wrong. All you need is to go through this article and then decide if it is still way above your head. All it takes is to get started and after that there would be no looking back. Let us have look at most important tips for a dummy to manage his/ her finance. You need to understand these points rather than just plain reading if you want to live a comfortable and prosperous life with your hard earned money.
Take Control in your own hands:
If you depend upon someone else for managing your money then you may never be able to learn to manage your funds. Instead of relying on others, take the charge. Learn to have fun and still save the money rather than blowing it off on your friends. Don’t depend on others for money related advices. You yourself know better that what are your future goals and priorities and how much you want to save for them. For example, if your parents manage your money for you then maybe they will ask you to purchase a house for yourself whereas you want to purse higher education through that savings. Got it?
It’s a must nowadays. To most of us, parents taught us this skill during our childhood. Sooner or later you will need it so learn to self-control as early as possible. Yes, it’s easier to purchase some brand new gadgets with your credit card. But do you really want yourself to pay back the interest on an electronic gadget which would be probably out of date in a few weeks? If you don’t need something necessarily, avoid purchasing it.
Start an emergency fund if you have not started it yet. No matter how much you save, just put some amount as emergency fund in your account each month. It will really keep you out of troubles in your financial emergencies. Don’t keep it your locker or under your pillow. Put it a high interest paying deposit. Emergency Fund is of no use if you keep borrowing money from it after every two-three days.
Health is Wealth:
Buy a health insurance policy which can cover as many ailments as possible. If you do not have a health insurance its better if you stay at home locked from inside. Even a minor injury or fractures nowadays are enough to burn a hole in your pocket. It’s better to bear the burden of monthly premiums of health insurance rather than having a dent in pocket.
Understand taxes. When you get your first paycheck you need to know the in hand or takeaway salary after tax and various deductions. It would be really better if you prepare your annual tax return yourself, as there is plenty of tax advice available (both online and offline) which can harm you more than benefitting. Also, this will make you better off in long run. Pay all your taxes on time. No one will ever want to mess up with the tax officials. It would be better if you pay your taxes well in advance.
Most of the youth never plans for retirement. You need to prepare for your retirement well in advance. The sooner you start saving the sooner you will be able to call working an “option” rather than “necessity”. Sadly, most of the people realize the need of retirement fund when they have crossed 40s.Don’t commit such mistake knowingly. The earlier, the wiser. Retirement planning may be early, but eventually it will be you who will be benefitted.
Protect your wealth:
If you don’t want your hard earned to vanish overnight, get insurance. Insurance protects you assets and protects them from burglary or fire. These small things are very beneficial in long run. In the case of any misfortune, at least you will get a compensation for your loss. Hence, choose the right policy as per your requirement. If you need help in managing your money or investments, consult a fee based financial advisor rather than consulting a commission based advisor. A commission based advisor would always be biased as he will get the paycheck for each policy you will buy.
Learn when to spend:
Never let your expenses exceed your income. Make a budget and follow it. At the end of the month, whatever amount you are able to save put it in your emergency fund. Learn to save as much as possible. If you don’t buy a car for some more time and commute via public transport, who knows you may soon afford to get a flat of your own before you start planning for it. Keep a check on your expenditure, especially credit card bills. They can really be painful if they exceed your monthly credit limit. Pay all your dues of previous month as soon as you get your salary. Just keep these petty things in mind and then all your expenses would be under your control.
No one needs to be an MBA or management degree to manage their own expenses. Just use these 8 financial rules to manage your finances. It’s never too early to plan for your retirement. Plan early and retire in style! These financial tips are for those folks who still have not realized the power of financial management. Even if you don’t have much money to save, the time is on your side as you are young. Compounding, or in simpler terms, “the ability of your money to multiply itself to make more money” is directly proportional to time. It’s really a no-brainer indeed. Isn’t it?