If there ever was a sensitive topic, it is personal money management. Whether you believe a friend is stingy or a chronic overspender, you are unlikely to bring up their management of personal finance while hanging out. Everyone manages money differently, but that does not mean everyone handles it well. Learning how to make your money work for you can be the difference between a good night’s sleep and late night insomnia.
Firm financial footing can only occur when you have funds to deal with unforeseen repairs, accidents or other problems. Unfortunately, accidents happen and there will always be additional bills or expenses you cannot plan for. The trick to resting easy about it, is in how you manage your money on the day-to-day. Included here are a few tips for putting yourself on firm financial footing.
Avoid Debt
The most chronic problem with today’s money management is that everyone seems to be up to their eyeballs in debt. Putting yourself in debt is a great way to ensure your financial future will never be certain. Owing money is like putting yourself on a constant cycle of catchup. Imagine still paying for a car when it is totaled and you have to buy a new one.
To avoid debt, it is as simple as learning to live without and planning ahead. Learning to live without may be counterintuitive to the American dream, but buying a car outright or paying for a house in cash will be well worth it. Save your money for any large expenditures and don’t buy anything on credit you can’t pay off within the month.
Plan For Emergencies
Planning for emergencies seems like an oxymoron; how can you plan for something that is unexpected? In reality, though, putting aside money for the unforeseen circumstances in life can help bail you out when times get tough. Experts recommend setting aside at least six months expenses for if you lose your job; additionally, these can help you with medical emergencies and car or home repairs.
Buy Property
Paying for rent year after year is a great way to build equity for your landlord; unfortunately, it does nothing to invest in your financial future. Unless you are planning to move again in less than 5 years, it is wise to buy a home and put your own sweat equity into the property. You will then have a valuable asset to sell should you need to, and you have the security of never being kicked out by a landlord.
Invest
With inflation working against your dollar value, sitting on your money is often not the best option. Allowing your money to work for you through investing is the best option for increasing your wealth and financial security. Invest in low-risk areas of the stock market, precious metals or in real estate.
