How to manage your money
Do you have a hard time managing your finances? Perhaps you have a bad tendency of overspending? Don’t worry, I’ve been there, but luckily today I’m going to share 5 money-management ideas with you!
1. Joining the right bank
Having the correct bank account might help you solve a lot of issues. Your bank account is the first step in success with money management, from lower interest rates to higher cashback benefits.
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2. Create a Budget
You will overspend if you do not create a monthly budget, and you will soon be in debt. When it comes to money, I follow a basic formula called the 50/20/30 rule. 50% of your income is spent on necessities, such as food, rent, and mortgage payments. Wants consume 20% of your money, which means you can spend 20% of your money on stuff you want to buy, such as phones, games, and so on. Savings and investments account for 30% of your income. As a result, your money will continue to increase and you will be debt-free sooner!
3. Don’t make unnecessary debt
Just because your salary and credit qualify you for a loan doesn’t imply you should take it. Many people assume that if they apply for a credit card or a loan that they can’t afford, the bank will turn them down. The bank only has access to your reported income and the debt commitments listed on your credit report; it is unaware of any other responsibilities that might prevent you from making timely payments. You must decide if a monthly payment is affordable depending on your monthly income and other obligations.
4. Limit your Credit Card spending
Credit cards are a bad spender’s worst enemy. When you run out of cash, you reach for your credit cards without thinking about whether or not you can afford to pay the balance. Avoid buying things on your credit cards that you can’t afford, especially if they aren’t necessities.
5. Have an emergency fund
In a month, a week, or even tomorrow, you never know what will happen. The golden rule is to always have an emergency fund in place that can last at least three months. This will relieve a lot of tension because you will still be able to survive if something goes wrong.
Mastering money management requires time and effort, but the ideal time to begin is now! Don’t fritter away your time or your money. Follow these five steps to get started on your path to financial independence! If you enjoyed this article, you might be interested in our “Credit vs. Debit Cards” article.
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