5 Financial Rules for a Healthier Way of Living
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Money, a piece of paper that unfortunately determines your societal status and without enough of it, it can cause unwanted financial heartache. Everyone wants to live a comfortable lifestyle and have the ability to provide for themselves and their families. However, it seems like money brings more stress than joy nowadays, but why is that?
Depending on your upbringing and the courses you were offered at school, being taught how to invest and treasure the value of a dollar was not on the top of anyone's must inform list. When you become more knowledgeable about money, and the different ways you can work with what you got, you put yourself in a better financial position to potentially increase your income and maintain a smarter and healthier way of living. Here are five financial rules and advice that'll help anyone maintain a financially fit lifestyle:
Cut Down on Credit Card Use
We've all been told that obtaining credit cards are one of the essential ways to build a financially successful life, but did you know that credit cards should only be used for conveniences? Having the ability to maintain finances is the overall goal of credit cards. However, many people seem to misinterpret the use of having a credit card and can easily get trapped into increased interest rates, late fees, and extreme debt. The total number of U.S. consumer debt is $3.9 trillion, which means 41.2% of all households carry credit card debt. By limiting your credit card usage, you are more likely to manage your spending habits and current financial status; creating a healthier way of living without putting yourself in financial jeopardy.
2. Avoid Unnecessary Spending and Stick to a Budget
Creating a budget is practical and helpful when planning for the future. Before you begin to indulge in spending on your favourite things, priorities must be set over pleasure. A great way to avoid unnecessary expenses is to evaluate the importance of a purchase 24 hours in advance to ensure it's something you need. You can also monitor what is being spent and practice living on less than what you earn. Always be conscious of where your money is going because costs can accumulate quickly and lead to financial disaster.
3. Set Up a Savings Account
The most important way to become financially secure is to set aside a savings account. Why is it important to save? We can't predict the future, and having a saving account acts as a safety net for unplanned circumstances and emergencies. According to TIAA, at least 20% of your income should go towards savings. Meanwhile, another 50% is allocated for necessities, and 30% is used for discretionary items. This is called the 50/30/20 rule of thumb. Don't get me wrong; I know how hard it can be to start saving because there always seem to be something that involves spending money. But if you decide to take steps to produce more financial flexibility, you will relieve yourself of stress but also have the freedom to live life on your terms and have full control of your financial capabilities.
4. Start Investing
Investing is a smart option to gain additional income for the future. The cost of living is getting higher, and it's becoming harder to rely solely on one income alone. When you invest, you are committing to build another resource for future benefit. Investing some of your hard-earned money can prepare you for a future of prosperity. There are many ways to invest, which comes with their risks, but educating yourself will improve your knowledge of money management and will create long-term opportunities. Some ways to invest include trading stocks, commodities, cryptocurrencies, peer-to-peer lending, and real estate. Ultimately, you don't need a substantial amount of cash to begin investing; you can start with what you can manage, and make your money work for you.
5. Own a Home Instead of Renting
Everyone eventually dreams of owning their own home someday, but life circumstances prevent many of us from obtaining this goal. Owning a home helps build equity and wealth for your family. It's providing for future generations which creates wealth for all. Having property offers you more freedom and provides flexibility with your investment. As time progresses, you will no longer have to pay a mortgage and the money you used to invest in your home will help you leverage your property in the future.