Tips for being financially savvy
Finances seem to be the root of all of life’s problems.
But it doesn’t have to be that way.
It is possible to live off what you’re earning, make the most of your salary and be happy in the process.
Why wallow in financial stress when all you need is to apply a few finance tips to be savvy with your money?
It’s not that difficult and you will live if you have to cut down from a daily takeaway coffee to a weekly one. Making smart financial decisions are worth it all in the end and the earlier you start applying these principles, the better “value for your money” you will experience. Unfortunately, money makes the world go round but, luckily, we know how to make that work for us.
Have a budget
All things finance start with a budget. And there are more than enough finance apps for setting up your monthly budget. Add all of your expenses together (try not to have a heart attack) like rent and car insurance, and subtract this from your income. That’s the basic premise of a budget, see where all of your money goes in the month and see what you have left of it to spend.
The reason you should add all your expenses up first is so that you can see whether or not you can actually afford your lifestyle. You will also, very quickly, be able to see which expenses are totally unnecessary and where you’re “wasting” your money.
Having a physical adaptation of the budget you might have in your mind, makes it easier to stick to what you can afford, comfortably make your necessary payments every month and not end up eating two-minute noodles for the rest of the month… when it’s only the 15th. Be responsible with your money’s whereabouts by having a budget.
Use a calculator
And not just any calculator, but a finance calculator for working out your personal and vehicle loan repayments. With these finance calculators, you are able to work out how much your monthly instalments will be if you choose to pay the loan off over a certain period and at the current interest rate. You will also be able to see how much more you’ll be paying for the loan once the overall cost has been calculated with all the accumulated interest from the time period over which you’re making payments.
This information will allow you to make smart financial decisions in terms of sacrificing something extra for a couple of months in order to pay off your loans sooner and not lose money over interest. It makes it easier for you to see how a repayment will fit in your budget and whether or not you can even afford it at that moment.
Making use of a finance calculator will stop you from making uninformed and impulse decisions on debt-threatening situations. Which is definitely a good thing.
More than one income
Having one source of income isn’t always enough anymore. If you have a passion-project or some extra time to work another job or do freelance work online, you should do it. The more income you have to work with within your budget, the less financial stress you’ll have to deal with.
And, let’s get something straight, just because you have more income, doesn’t mean you can unjustifiably increase your expenses as well. It’s an opportunity to save more money, invest more money (yes, you should be doing both) and get out of any debt ASAP. You need to list your financial priorities and set some goals that will become achievable once you have more income coming in. That way, you won’t be tempted to splurge it all online as “extra cash” or suddenly decide you need an entirely new wardrobe and the latest tech-gear.
Careful with your credit card
One of the best tips you could receive on how to be financially savvy is to be careful with your credit card. Credit cards, if used irresponsibly, can lead to mountains of debt, terrible credit scores and a bad habit of spending more money than you have available to spend.
For example, you should never draw money from your credit card, transfer money from your credit card to another account, only pay off your credit card in minimum payment increments or use up your entire credit limit in a month if you can help it.
Having a good credit score plays a large role in the rest of your financial and independent life. It has an effect on your interest rates, on when you want to be approved for financing and when you’re trying to buy a house or even just open a cellphone contract. It’s extremely important that you’re responsible with your credit card and timely with your credit card repayments.
That doesn’t seem too difficult, does it?