Finance Basics: The three
rules you must know
These days lots of
people are looking for ways to better manage their money. There
are many resources available to help you stay on top of your
finances, but you really need to focus on three rules. These
rules will help guide your decisions, help you make the most of
the money that you have and help you keep your books balanced.
These rules are to spend less than you are bringing in, use the
money that you have wisely and plan for the unexpected.
The
first rule of the three is the
most important to start with if you’re not familiar with finance
basics and managing your money. You need to spend less money
than you are bringing in. Many people get themselves into
financial trouble with credit cards and other forms of high
interest loans because they cannot, or will not, alter their
spending habits.
Taking control of your
spending is an essential finance basic because it is within
everyone’s reach. It’s the fastest way to give yourself a raise
without having to ask for more money from your boss. Spending
less than you earn may seem hard but it’s just a matter of
making different choices.
For example, taking your
own coffee in a washable mug each day instead of stopping by the
coffee shop can save you almost $1000 per year! That may not
seem like a lot, but if you’re earning $20 per hour at your job
you’re roughly spending 48 hours working just for coffee! When
you look at the extras you are buying and put them in
perspective like that it can be easier to reduce your spending.
The second finance basics rule
is make the most of the money that you have. If you’ve reduced
your spending, you need to start moving the money into a savings
account or working toward paying down your high interest credit
cards.
If you use a credit
card, see if you can transfer your balance to a credit card that
offers cash back bonuses or other incentives. You can purchase
everything on that credit card and then pay off the balance each
month. The cash back bonuses can help you earn more just by
purchasing the things that you need.
You can also shop around
for basic services like your television, mobile phone or
internet access. You are paying these bills each and every
month, so it makes sense to find a cheaper alternative. You may
also be able to do this with your utilities or other monthly
payments. Doing this research will help you make the most of the
money you have.
The final finance basics rule
is to prepare for the unexpected. This may sound like an
oxymoron but if there’s one thing that you can expect in life,
it’s the unexpected. You may not know what form a financial
crisis may come in, but you can be sure that they will come from
time to time. From a car accident to a leaky roof, you can
prepare for these unexpected events by moving your extra money
(from your reduced spending and a cash back credit card) into
savings.