To successfully manage your personal finance and wealth, you have to be able to live by some rules. You won’t see many people providing you guidance or education on how to manage your personal finance. This post has curated a list of 20 top personal finance rules that you should live by. Peruse the rules listed below.
1. Salary is not the same as savings.
Earning a high salary won’t automatically make you a rich person. Just as being a low salary earner doesn’t make you automatically poor. It is the amount you end up saving from your salary that will determine your net worth.
2. Saving is as important as investing.
A good financial decision will be to set a high rate of savings. This creates a huge safety margin for you in life. A lot of people don’t take this simple advice
3. Avoid credit card debt like the plague.
It is so easy to carry a lot of credit cards around. You would be well advised to avoid them as they will only impact your wealth negatively
4. Live below your means.
Do not take bits of advice that tell you to live within your means. Live behind your earnings power to stay ahead financially.
5. But credit itself is important.
As much as you should avoid incurring debs on credit cards, there are instances where you need credit cards to stay ahead. Ensure that you have a solid credit card score and pay your balance off monthly.
6. Understand your priorities by tracking your spending.
The only way to be in charge of your personal finance is to understand your spending habits. Cut back on frivolous things and regulate your spending.
7. Automate everything.
Set your financial life on autopilot. It is the best way to track your finances and make your life easier. Manually keeping track is difficult.
8. Get the big purchases right.
Don’t overextend yourself on purchases. Save for the right things first before you spend big on your desires. Look out for housing and transportation.
9. Build up that savings account.
There are emergencies that become eventualities. This is why having a savings account is very important. You must have cash or liquid assets to take care of these situations.
10. Cover your insurable needs.
Insurance provides a margin of safety for you. With insurance, you get to protect your wealth.
11. Always get the match.
You should always attempt to max out your retirement contributions. At least, save enough to get your employer match.
12. Save a little more each year.
The fastest way to build wealth is to increase your savings yearly. When you get a pay rise, increase the amount you save.
13. Choose your friends wisely.
Don’t try to keep up with friends and neighbors who are spendthrifts. Don’t look for acceptance from people who can’t manage their finances.
14. Talk about money.
People don’t discuss money enough. Engage people in this subject. Find out more about finance management by talking to your friends and loved ones.
15. Material purchases won’t give you long-term happiness.
Shopping makes a lot of people happy. In the long-term, if you don’t shop wisely, you will only increase your misery as your debt will be compiled further.
16. Read a book or ten.
Don’t just sit and think you can manage your finances without knowledge. Pick a book or two on finance management and amass knowledge.
17. Know where you stand.
Have a clear idea of your income and expenditure. Know how much you are worth. Identify your assets and liabilities.
18. Taxes matter.
Understanding your tax situation will allow you to take advantage of tax breaks that are available to you.
19. Make more money.
Don’t just cut back on frivolities. Push yourself ahead of your colleagues, take more responsibilities and try to earn a higher salary. Don’t limit yourself.
20. Don’t think about retirement. Think about financial independence.
Stop thinking of getting to that age where you can retire and stop working. Think of getting to the stage where you have enough money that you don’t have to worry about money anymore.
Hope these tips help. Treat them as your guide to financial independence.