Whether it is removing clutter from your mindset or scrimping in your daily expenses, becoming financially independent is of paramount importance to today’s youth.
Here are five personal finance rules by which one can achieve that:
First, remove clutter from your cashflow and devise a budget which you would regularly abide by. Do not make impulsive and unnecessary purchases when you follow your budget. To make such expenses, it is better to set up a fund by saving part of the income. This way it won’t damage your overall cashflow.
Save before spending. The practice of saving adds to one’s psychological wellbeing.
Firstly, you would be assured that you are saving so you don’t have to stress in case you need money for an emergency.
Secondly, since you know the amount of money that is available for spending, you would be capable of controlling your spending on things that are not necessary.
Credit cards are not bad; they are a convenient and powerful tool in the time of need. You should use them with responsibility and repay the dues before the deadline.
On the off chance that you have got a drawn out card debt, it is better to transfer that debt to personal loans that have lower interest rates as compared to credit cards. This way you can repay it as soon as possible before interest takes a hit at your cashflow.
The three rules mentioned above would guarantee a smooth cash flow. This, in turn, would help you achieve an investible surplus.
As explained in rule 2, save before you spend. However, saving is not sufficient to attain your financial targets.
You need to contribute to those savings in different financial instruments depending upon your risk outlook to get the most returns and attain budgetary goals.
Besides investing you need to link your financial goals to investments. This would assist you to administer your investments successfully.