How to be good with money?
Practically, for most of the people, earning money is easier than managing it correctly. However, the truth is, that you don’t need to be a financial expert or a wizard to get the things on track and be good with money; here are some important tips on how to be good with your hard-earned money.
1. Restrict yourself to justifiable expenses
Before you spend money, either a large one-time purchase or small recurring expenses, you should justify your decision to yourself. Even if you might feel that you can afford it, you should go through your finances a couple of times and see if you can justify your decision. You will automatically reassess your decision if you can postpone your decision for one day. It is simple; just because you have money, that doesn’t mean that you buy whatever comes in your way.
2. Adhere to a budget
Preparing a monthly budget may sound daunting for many people. However, if you really want to achieve peace of mind by doing good with the money you earn, budgeting is compulsory. A monthly budget should include the expenses and earnings during the given month and that is not as complicated as one might think. Such approach would give you a good idea about the unwanted expenses you have done during the past month. Also, it helps you to plan the upcoming financial month with better sense.
3. Don’t let unbudgeted expenses ruin your plan
Once you subtract the essential expenses from your earnings, you will have some money left in your account. This is the most important portion of your earnings, we should say. It is true that you can spend a portion of this amount for some entertainment and yet, you shouldn’t spend all of it! Don’t spend this amount on a big purchase either until you achieve a ‘fully settled down’ status. A one-fourth (at least a one-fifth) of this amount must be saved for emergencies.
4. Be careful when you commit to new recurring expenses
If you have a good credit score and a provable income, you will be eligible to obtain a loan facility. However, you shouldn’t go for a loan just because you are eligible. Instead, you should go for a credit facility only if you badly need it. You must remember that each credit facility you obtain causes a new recurring monthly expense (loan installment). To pay this monthly installment, you don’t get any additional income (unless you have invested the loan you obtained in a profitable business).
Besides, you should learn how to use your credit card in the proper way. Don’t pull out your credit card unless it is a real emergency. In fact, if you are a bad spender, credit card can make things incredibly worse for you. Most of the consumers purchase things they don’t need just because they have credit cards. If you really need to use a credit card, use one with a small credit limit which is sufficient enough to help you in an emergency.
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