Statistics show that just 39% of Americans have enough cash to cover a $1,000 emergency expense. How can you put yourself in a position to not become a victim of this stat? What does your current savings account look like? Are you actively planning for future emergency expenses?
Personal finance is not a topic that is covered in any depth growing up, meaning most adults are left to figure it out through trial and error over time. Keep reading to learn a few tips about personal finance to try moving forward.
Know the Flow
How much cash are you bringing in each month? How much of that cash do you spend on rent, groceries, gas, and entertainment? One large focus of personal finance is understanding your financial health. If you know the exact amount you bring in, how much you spend, and how much you save, you are likely ahead of the average consumer when it comes to your finances.
While not everyone balances a checkbook as the previous generations did, you should have an updated idea of how much money you have. This gives you the knowledge to make certain decisions when you know whether or not you can afford the additional payments or a one-time expense.
Save & Invest
While savings accounts are a great place to store your money, investing some of the money in low-risk securities can also help you grow your income passively. Many different investment options allow you to put money in and let it grow over time. Mutual funds are a good example of this.
While they may not give you the 200% return that a stock has the potential to, they are less volatile and more consistent over time. Consulting a financial professional and taking a portion of your savings to invest could be beneficial for your future. Not touching the money that you are investing will help it stay saved and ideally multiply over time.
Payments don’t always mean debt. You can be paying for things over time to build up your credit and make you more eligible to buy a home or a car in the future. Looking into options for flexible payments can help you pay off a new couch or a new computer over time instead of all at once. This will be less of a hit to your bank account and allow you to relocate those funds to other expenses.
Keep in mind that you don’t want a high-interest rate for these payments. Otherwise, it would make more sense to pay in full. Looking for things such as affordable car insurance and affordable therapy can save you from spending hundreds more than you should each year.
Take Your Time
People who rush into buying decisions often find themselves dealing with buyer’s remorse afterward. Adopting the concept that you will take your time when spending money and purchasing items can help you determine if it is something you really need. Most salespeople will play to your weaknesses and convince you of the value of what they are trying to sell.
While it may be something that you want, you want to take the time to determine if it is a good fit financially for you. If you are confident that you can make the payments and will find the product or service to be beneficial, you can move forward with purchasing it. The key is that you take your time in arriving at that yes or no answer and make a detailed decision based on your finances and not just on a whim.
As you have read, personal finance is not something that anyone ever masters. It is an ongoing battle that you will have to face with each new transaction. Continuing to learn new strategies for managing your money and investing can help keep you on the right track, however, and help you avoid the common pitfalls that can affect others.
Financial opportunities and new ways to save or earn money are constantly being developed, so staying up to date on financial news can help you take advantage of those opportunities for your personal finance. While new things like investing and budgeting can be scary at first, their payoff can be a tremendous boost to your finances.