There will be a lot of personal finance rules that you may find online that could be or could not be here.
Everyone has different lifestyles, goals, incomes, and circumstances that affect their financial situation.
Many experts will look at various aspects to find the perfect rules, but it is up to you to decide which one works best.
But in this article, you’ll read some practical personal finance rules that you can use to achieve your financial goals.
You can take them all and test which works best for your lifestyle to live a secure financial life.
Pay Off Debts ASAP
One of the most crucial things to know when you hit adulting and start creating financial goals is to pay debts.
You want to avoid carrying any liabilities for a long time, so pay high-interest debts first as much as your resources allow.
You may have it on your credit card, loan, or from a friend, but regardless, make sure that you are clear.
These types of debts accumulate quickly, and their interests are not a joke, so settle them before falling into bankruptcy.
When you clear these debts, you are letting yourself breathe in a difficult financial situation.
It may not do much, but it is crucial to establishing a financial goal because it improves your financial security.
By paying off debts, from high to low, you are reducing stress and building a better future for yourself.
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Create a Budget
Creating a budget may seem like the easiest out of this list, but it is significantly challenging when your income changes.
But you can only sometimes control how much you will make in a month or a year, so focus on managing your expenses.
Estimating your average monthly expenses is easier when you live in the same environment and lifestyle.
As you create a benchmark for your bills, creating a budget and adjusting them according to income becomes easier.
Your income will determine how much budget you will set, but you can also reduce expenses when necessary.
But if you want to keep your expenses the same, look for an additional source of income.
Generally, you will increase your income or cut expenses to create a wise budget.
Save Money in A Good Bank
If you have the cash to put in a bank, consider what offers excellent rates, customer service, and promos.
Many people may need to know what bank to choose, but it is essential to look for a bank with insurance too.
Federal Deposit Insurance Corporation insures your money in the bank for up to $250,000, so check if they are under them.
While looking for a bank with decent rates is standard, ensure they also provide the lowest fees.
Little things like them can help you save money because a small cent or dollar can go a long way.
The most legit ones pair with traditional banks to keep your money safe while delivering higher rates.
As more people rely on technology, this type of bank can be helpful, especially when transferring money.
Apply the 30-Day Buying Rule.
If you find an item you want to buy, whether at an online or physical store, wait to buy it.
Your mind will tell you to get it, especially if there is a promo for that item, like free delivery or 10% off.
But in reality, you are not saving because you bought something you don’t need.
So wait for at least 30 days and let yourself calm down from any impulsive decisions of buying what you don’t need.
It may seem long, and the deals may finish, but saving money and avoiding regretting purchases is a good practice.
After 30 days, if you still want the item, buy it and give yourself a little treat.
Insurance may be underrated, but it is essential to your financial security because it can protect you from unexpected financial circumstances.
Events like medical emergencies, natural disasters, and other accidents can cause a dent in your account.
But with the help of insurance, you get help covering the damages’ costs and avoiding financial setbacks.
These days, more types of insurance are available on the market, but the usual ones are health, car, and home insurance.
When you get insurance, you guarantee protection for you and your family in case of financial emergencies.
Not only will it help you with your expenses, but it can provide peace of mind whenever there is a crisis.
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Use Credit Cards
It is normal to use credit cards, especially if you don’t have the money to buy an item you need immediately.
But what you need to take care of is paying your credit card bills on time to keep your credit score good.
Credit cards can be extra helpful if you need to buy monthly purchases like groceries, loads, fuel, and more.
And to get the best out of using credit cards, pay them in full monthly so you can gain rewards from your bank.
Some banks offer promos such as cashback with minimum spending, which you can quickly achieve with recurring purchases.
Improve Credit Score
Improving your credit score can be helpful, especially if you plan to loan a house or car.
If you have a fair credit score, you will get the best rates and terms when you apply for loans like in Credible.
But if you are starting, you can improve it by paying bills on time and not maximizing your credit limit.
You can also put it on auto-pay and use the card to pay for your monthly purchases like gas, groceries, etc.
If you have a child, you can build their credit score by adding their name to your account.
They can receive their card, but you do not need to activate it.
As long as you maintain good credit, they also earn it.
401k & Tax Accounts
You can check if your company offers a 401K or a retirement plan.
Your employer sponsors your retirement savings plan with tax benefits in this setup.
With 401k, a part of your income goes into your 401k account, so you have something to spend in the future.
When you decide to quit your job while you have a 401k plan, you can still cash it out and take the lump sum.
However, if you withdraw it before you turn 60, you have a 10% early withdrawal penalty and income tax.
Save and Give
The famous quote about giving is better than receiving is true in this personal finance rule.
You can give money away while still saving for yourself, and if you believe in karma, it can return you ten folds.
As long as you have the resources, save at least 10% and give away 10% to charities and meaningful advocacies.
You can give money out of kindness, but when you think of it, some programs may help you back when needed.
So think of it as investing in a community program that you can benefit from in the future if the situation calls for it.
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These personal finance rules may or may not work for you, especially if you have a different financial situation.
But you can use these rules to craft and develop a working strategy to improve your financial situation.
Whether you have the mindset of living beyond 60 or until tomorrow, put a healthy balance between saving and spending.
Once you find the perfect way to manage your finances, you can live in comfort, luxury, and stability.