Virtually any country – both today and in ancient history – have started based on a set of principles, core tenets to live by in order to move ahead successfully. I firmly believe the same is necessary when you first set out on your personal finance journey. These 10 rules are the commandments I live by every time I make a financial decision or sit down to revise my budget.
* Save at least 10 percent of your yearly income.
* Have goals for yourself — and write them down.
* Do not spend money on items you cannot afford to pay immediately.
* Treat credit cards like a privilege, not a right.
* Have a cushion for yourself.
* Stay on top of all purchases, bills, and other financial information.
* Keep it simple when it comes to personal finance.
* Have a disciplined plan, but be flexible when necessary.
* Do not go it alone — ask for help.
* Reward yourself within reason.
For more detailed information on each one, keep reading.
Save at least 10 percent of your yearly income.
The current recession has taught people to start saving money again, which can be looked upon as a silver lining to this storm. For years, the savings rate was less than 0 percent, meaning people were actually spending more money than they made. That’s a recipe for disaster. The law of compounding interest tells twentysomethings that if they can begin to stash money away now in different savings accounts and stocks, that there will be more time for the money to grow on its own. Ipso facto, at the end of your working career, your money will have had more time to collect interest and give you a bigger nest egg. The problem is, generally speaking, twentysomethings don’t have high incomes and consequently do not have the ability to stash away as much cash.
Don’t let your current financial situation, whatever it may be, force you to believe you can put off saving money. Start small. Stash 10 percent of each paycheck away for savings. It’s important to know what you’re saving for (another commandment), but I suggest you put away enough money for an emergency fund — approximately three to six months’ worth of living expenses — first.
Have goals for yourself — and write them down.
I’m a firm believer that nothing becomes concrete until it is written down, tangible, literally in your hands. This goes for your financial goals, too. It doesn’t have to be an elaborate spreadsheet breaking down g Continue reading ‘Common Sense Commandments For Personal Finance’ »