5 Simple Personal Finance Rules to Success
Many people don’t know how to manage their personal finances. In the US our kids get 12 years of schooling to go out and tackle the world and can’t reconcile their checkbook. This comes from lack of personal finance education which is one of the most important aspects of having a rewarding life. Debt is a terrible burden and it starts with understanding the basics of personal finance. By having the some knowledge in managing personal finances, you will hopefully avoid making some bad decisions and you will be on your way to financial success; thus, ensuring your financial future. I just have a few simple rules to get you started in personal finance management. These rules will help you understand the importance of having financial freedom.
• Rule #1 – This one is my favorite – Pay yourself first. You should always give yourself a monthly allocation for savings before paying your monthly mortgage, credit card payments, and even groceries. By paying yourself first, you will not have to worry when an emergency comes up or when you eventually retirement. If done right and/or early enough paying yourself first can also enable you to retire faster and enjoy the life you always wanted.
• Rule #2 – This one is my least favorite but still a must – Protect what you own. This may not be exciting, but having insurance coverage for your car, home and even your life is a must. You do not want to get wiped clean if something tragic should happen. And what if you died early? It is better to be prepared especially for those in your care that you leave behind. These things need to be thought about no matter how morbid the thought of death is to you.
• Rule #3 – Don’t get into debt for junk – Pay your debts as early as you can. Make paying it off a priority because debt is a financial cancer you don’t want to live with for the rest of your life.
• Rule #4 – You are the master of your universe – Take control of your income. It is crucial that you know how to invest your income in real estate, stocks, etc. in order to gain future financial freedom. By investing, you will receive returns that you can use for your future needs or even an early retirement.
• Rule #5 – Learn everything you can to make it work for you – Power over money. Like the fourth rule, this rule states that you should have power over your finances. Control your income by assigning every single dollar a place for it to go. Most important of all is to think of a way that will keep you earning money even if you stopped going to work. Build a website, for instance. Invest in real estate. These are some ways to expect future income with a little initial effort.