At every juncture of our lives, the focus has always been on the need for individuals to save money. We are called upon to save for our kid’s college education, to save in case we get laid off, to save for retirement, to save for peace of mind and so on and so forth. So important has saving become that we tend to get into a state of panic should we realize that we are getting old and do not have enough in our coffers to assure us of a comfortable life should anything unexpected happen. Unfortunately, while saving is of essence, we can’t run away from the fact that it’s increasingly becoming difficult to achieve the same as years go by. The cost of living is always skyrocketing and our income might not be sufficient to meet all our needs not to mention our desire to have excess to save.
While saving money is increasingly becoming a difficult endeavor, what we must all agree to is the fact that the process of achieving ones financial freedom, creation of wealth as well as money saving all starts with a clear understanding of what personal finance is. The false assumption out there has been that personal finance is essentially all about meeting monthly obligations and cashing out a paycheck every month. Far from it, personal financial is all about having sufficient money to meet all your financial needs as well as financial goals in life. It is all about prudent management of the money we receive to ensure that we meet all our financial objectives.
The truth of the matter is that the lack of money leads to immense stress. You become stressed when you cannot meet your monthly obligations, when you cannot pay school fees for your kids and so on and so forth. To avoid a situation where you find yourself in a quandary, let’s look at some personal finance tips that will ensure you get on top of the situation.
Personal finance is not about what you earn but ultimately what you save
Even if you earn a million pounds, that would not make any difference if you cannot save a portion of the same for a dry day. Endeavor to save at least 10% of your income (net earnings) every month. In any case, focus should be on living within your means and spending less than what you actually earn.
Keep track of your expenses
You cannot achieve financial freedom if you are a reckless spender. Endeavor to come up with a good spending plan to keep track of how you spend your money. Emphasis should be on cutting down on unnecessary expenses, understanding your spending habits and coming up with a proper budget to ensure that you save money on a monthly basis. Do not live beyond your means and stick to your budget.
If you want to be on top of your personal finance, endeavor to invest. Granted, some people find it difficult to save money and would rather channel money towards an investment. An investment in a home is a pretty good idea especially if you find a mortgage with low interest rates.
In essence, personal finance is all about making prudent financial decisions. If your bank does not offer attractive interest rates on your savings account, it might be time for you to find a better financial partner. Go for credit cards with low interest rates, stick to a budget, understand your spending habits and don’t veer off from your ultimate financial goals!