Personal finance refers to all aspects that are related to current expenses and financial aspirations for future. You may be a winner or a loser; however life gives multiple chances to correct mistakes and you must learn from your experiences. Till your last day on this earth, you are very much into this money-game. And it is very important that you educate yourself on the basic rules to play it right.
The Rules of Personal Finance
Rule 1
Money begets money! That means you can use money to create more sources of income. Make plans for saving because that will help you escape the bondage of a wage slave. But that will take a long time, say till your retirement. Depending on your saving, you can live a carefree life and fulfill financial commitments without feeling any monetary constipation.
Expenses and saving are two columns in your budget book. When you pay more attention to one, other is neglected. So maintain a balancing act. I am not telling you not to dine out or enjoy with your friends, I am only suggesting on inspecting your last three or four months’ expenditure pattern. You can immediately remember which categories consumed a lion’s share of your earning.
Personal debt is the main constraint for your effort to manage your finance in an optimal way and better your life. A personal debt is just like a hole in your pocket through which a large transfer of your wealth is made towards lender. Every debt that you pay for could have been saved and made working for other purposes. If you have any existing liens, clear them as early as possible and live a debt-free life.
Rule 2
The most basic rule of personal finance is to keep it under control. The cause of spiraling debt issues result from losing control of finances. Make a budget so that you can manage your monthly household and other expenses more efficiently. Keep the monthly budget sheets in a file and review it annually to understand if you have made any progress in finance management or not. Pay bills on time. If you have large dues due to some unavoidable situation, pay a visit to the creditors in person and inform them about your financial catastrophe. Some creditors are very sympathetic and will allow you to make a partial payment for time being.
Rule 3
Have you ever watched financial life of your close ones? What is their expenditure pattern? The people with whom you hang out very often have a greater influence on how you manage your finances. If they are lavish on expenses, you too will follow the footprints as the word goes, “Birds of the same flock fly together”. Are they keen on following the first two rules of finance management? If not, distance yourself from those friends or relatives because you too will unconsciously follow them whom you spend a lot of time with. Instead make friends with those who have the same income ceiling like you and attune themselves to the first two rules. You may feel encouraged to emulate them on the finance front and will be able to ensure a better living for your family members.