Personal finance covers a vast topic about money. However, it mainly focuses on topics like money management as well as topics like investing and saving. As a whole, it involves insurance, budgeting, banking, investments, mortgages, tax, retirement planning, and estate planning. The term most involves everything about the financial industry and the products and services that surround it like the ones offered in IRESS.
Personal finance is also a topic that focuses on meeting one’s personal goals, be it short-term financial needs, saving for the college education of your kids, or for your retirement plans. The amount you save will be based on your income, living requirements, living expenses, and other goals and desires in life. For you to make the most out of the income that you have, you have to be financially literate because your financial knowledge will help you deal with bad or good decisions in life.
Personal Finance Strategies That You Should Follow Now
You must start your financial planning as soon as possible. Here are some personal finance strategies that you should apply now.
Devising A Budget
Living within your means allows you to live without missing sleep at night because you are thinking of your unpaid debts. To meet long-term goals, you must develop a budget following the 50/30/20 method. 50% will be allotted to your living expenses, 30% will be for your discretionary expenses while the 20% automatically goes to your future or your savings for emergencies and your retirement.
Have An Emergency Fund
There will come a time when you desperately need some money. During these times, if you do not have an emergency fund, you will be forced to loan some money. Although loans are an advantage for huge purchases like houses or cars, they will leave a dent in your bank account if you keep on loaning over small things or your monthly bills. The interest will eat up your income and you will become broke.
Limit Your Debt
Simple but hard to achieve. Limiting your debt is the dream of everyone but it seems like this dream is quite hard to achieve. Without self-discipline, you will end up spending more than your income. Will you be able to resist a brand new iPhone model? Or the latest fashionable bag? Will you keep away your credit card with these unnecessary purchases? Because if you limit your debt, you are on the road to financial stability.
Utilize Credit Cards Wisely
One of the major debt traps that we have nowadays – credit cards. But credit cards are not all that bad. With the use of a credit card, you will be able to easily track your spending, something that can become a big budgeting aid especially if you also use finance software from IRESS. What you need to do with your credit card is to manage it correctly. Pay your full balance every month or have a minimum credit utilization ratio. The most important thing you need to avoid when using your credit cards is maxing it out and not paying your bills on time.