Personal Finance | 5OLDETAVERN

Being successful in your personal finance is a matter of understanding your income and expenditures. There are right decisions and there are mistakes with dire consequences, which is why these points which one should avoid in order to achieve healthy personal finance need to be discussed.

Do not spend your entire income. Remember, it is always wise to pay yourself first. When you get your paycheck, the first thing to do is to set aside, ideally, twenty percent as a matter of savings. This will serve as your funds should there be emergencies or should your income be interrupted. Good management of your personal finance starts with having savings.

Do not spend more than your income. If spending your entire income is a mistake, this is a bigger mistake since it will consequently bring you to debt. Being debt free is a sure sign that you are managing your personal finance well.

Settle your credit card?s full amount due. This can be a bad habit since interest is charged on the remaining unpaid balance. And interest expense is one expense which you do not see, feel, or enjoy what you are paying for. It is always better to keep in mind that, if you can?t afford it then don?t buy it. Spend only what you can pay for. At the end of each billing cycle, pay for the full amount. Planning and making a budget of your personal finance is essential.

Do plan and schedule events that will require a considerable amount. Events like childbirth, weddings even birthdays are not surprise situations. You know it?s upcoming and you will always have enough time to save for it. The same goes for home renovations, vacation trips and major purchases such as cars. Successful personal finance is achieved with a mature grasp of planning and scheduling events and major purchases.

Do have a financial goal and aim for passive income. You know how much money you make, and how much you can set aside. Set lofty yet realistic goals which you can quantify as to how much money you?d like to have set aside at the end of a given period of time. Start with an amount which you can achieve in, say, twelve months. Then set another goal for the next twelve months. In time, your savings will allow you to place your money in higher yielding investments instead of a simple savings account. With a healthy personal finance you will not have to rely on guarantor loans.

Source: http://www.5oldetavern.com/2011/09/personal-finance/

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