Tips for Taking Control of Your Financial Future
Distilled to its barest essence, money has two purposes. You can use it to consume or you can use it to produce. And frankly, far too many people see money as a tool for consumption rather than production.
Was it the other way around, they could always be in a position to consume, as their money would replicate itself. once money is used to consume, it’s gone forever.
This is an important fact to keep in mind as you consider these tips for taking control of your financial future.
1. Develop a Spending Plan
The only way to achieve any goal is through a plan. The sooner you begin living by one for your spending the better off you will be financially. First and foremost, this will make it easier to achieve your long-term monetary goals.
Most financial experts recommend a 50:30:20 ratio for apportioning your income. Fifty percent should be used to cover your food, clothes, shelter, utilities, insurance, and transportation.
Thirty percent (or less) should be earmarked for things you want, like meals out, hobbies, and frivolous shopping. The remaining 20 percent should be applied to savings and investments.
2. Eliminate Debts
You might have noticed debt payments weren’t included in that 50:30:20 plan mentioned above. This is because the ideal financial plan has eliminated the use of credit to make purchases as much as possible.
The goal here is to live as debt-free as possible. Thus, a portion of the 30 percent apportioned to wants should be used to eliminate credit card debt even if it takes getting a credit card consolidation loan. There are many ways to manage credit card debt. A few examples are credit card consolidation, the debt snowball method, and debt relief programs.
3. Create an Emergency Fund
As you’re eliminating debt, you’ll also want to set a portion of that 30 percent aside to create an emergency fund. A good rule of thumb is to accrue three to six months of your monthly living expenses to offset any potential interruption of your income.
That money can also be used to cover any large unexpected expenses, so you don’t have to resort to credit and go into debt to deal with them.
4. Shop Carefully
With but 30 percent of your income to put toward discretionary spending and the eradication of credit card debt, you’re going to have to consider purchases carefully.
Hey, there‘s no shame in buying used — OK?
Sites like eBay and Craigslist are teeming with bargains on pretty much anything you could ever desire. Your local consignment stores can help you save lots of money on clothing and other essentials, by letting someone else take the depreciation hit.
This is also particularly true when it comes to automobiles. Shop carefully, you can find a car that looks just like the newest model with a warranty for thousands less than you’d pay for the same car new.
5. Ignore the Joneses
There’s always going to be somebody doing better than you (or at least appearing to) and there’s always going to be somebody doing worse.
That’s just the way life is. Getting caught up in conspicuous consumption competition with friends, co-workers, and acquaintances will leave you broke, with a closet full of obsolete crap nobody wants.
Just do you; let everyone else do the same. You’ll be much happier overall. These tips for taking control of your financial future will help you eliminate debt and set you on a plan that will permit saving for long-term goals too. In doing so, you’ll better position your money to produce for you, even while you also have disposable cash with which to enjoy your life along the way
