Not all humans are good with their finances. That’s why some people end up being broke no matter how rich they are or how smart they seem to be in other aspects of life. While money can’t buy everything, it can still buy a lot of things that we need and want in life.
So mastering how to deal with money will be great not just for yourself but also for your family, too. In this article, I’ll be sharing a few basic personal finance rules that you should start doing ASAP.
1. Figure Out How Much You’re Earning
The old adage about what gets measured gets managed is a fact, especially for our finances. If you don’t know how much money you’re bringing home, then you’ll end up with nothing at all at the end of each month, or maybe even before you reach your next paycheck. Spending and budgeting then can feel pretty much like torture, since you have no idea whatsoever if you’re spending too much.
Your gross salary doesn’t really equate to how much you’re taking home each month so religiously take note of that and accept the fact that this is your current rate and the only money you have to work with.
2. Spend Less Than What You Earn
Spending less than what you earn means finding the best deal for your current financial situation. This may mean that you have to forego eating out for at least an entire year to make ends meet but it’s totally better than getting in debt. But cutting back on your expenses doesn’t always mean a bad thing for you. Sometimes, it’s about choosing the right businesses to be involved with. For example, if you’re always wondering “why is my electric bill high?” or “how come your internet subscription is way more expensive than your neighbor’s?” then the likely answer to that is that you aren’t getting your money’s worth in your current plans.
Also, by spending less than you earn you will avoid overdraft fees that could tear a big chunk for your already measly salary.
3. Pay Yourself Next
We have to admit that we can’t always pay ourselves first. We are living beings that have needs and all that to survive. But in a way, the next thing you must prioritize is paying yourself either through saving, investing money, or investing time and money to learn new skills that will make you qualified for a promotion or choose a higher paying job in the future.
4. Consider Other Ways to Earn More
Speaking of higher-paying jobs, you don’t always have to get higher education and whatnot. You can sell your current skill set to earn a bit more cash. For example, you can display your artworks and sell them or ask for commissioned work. You can also work part-time as a waiter or even as a freelance writer for overseas or local clients. Entering the gig economy is a crucial step for anyone who isn’t really making tons with their full-time careers.
5. Pay it Forward
An ample amount of generosity can go a long way into making the world a better place. So even if you’re not rich, you should still think about donating whatever extra you may have at a time to help other people out. You may think this is counterproductive but doing so will definitely put you in the good graces of the Creator and help you become a better person as well.
6. Plan Spontaneity
Admittedly, the concept of planned spontaneity is a bit ironic. However, planning for spontaneous activities, in terms of your finances, just means that you are budgeting for an event that may happen in the future. It’s setting a cap on how much fun or YOLO you can be. By doing so, you’ll ensure that you won’t feel too constrained with an over-detailed plan while at the same time keep you from making big mistakes that will affect your financial freedom.
The Bottom Line
Money isn’t everything and it can’t really buy happiness. However, the happiness that you will feel once you know that you’ve managed all your green bills is incomparable! And the best part is that if you wholeheartedly follow these basic tenets of personal finance, then you’re already a bit better than the majority of the population in terms of how they handle money.