Twenty Seven Rules of Finance Today
1. Spend less than you get
If there is a key fundamental rule of financial management, then this is it: your expenses should be less than income. You MUST follow this rule, otherwise your whole future life is called into question. Get into debt and live on credit, because “everything will be fine”? So say the people who give you loans, and they really will be fine. And you? You have accumulated debts without making savings. To find financial prosperity with such an approach to life will help only a miracle. Do you believe in miracles?
2. Simplify your financial life
The more loans and credit cards, the greater the chance not to notice the loss of funds or to miss the next payment. The more deposits and accounts, the more difficult it is to keep track of them and the easier it is to not have time to react to emerging problems. The more complicated your financial life, the more time and energy it takes. Along with this, there is a growing chance to get confused and make a financial mistake.
3. Never let the “future self” control the situation in the present
Want to buy something that you can’t do right now, because in the future you will receive more and pay off your debts easily? Most likely, you will regret this decision for a very long time, because your “future self” may receive the same or even less, or even lose its job. Even if your financial situation improves in the future, there will be other expenses that it will not be so easy to handle without the mistakes of the past.
4. Start the path to good financial management.
Step 1: create a cash reserve for emergencies. Cash is still necessary and solves unforeseen problems quickly, on the spot, without going to the bank, without fuss with bank cards and problems with the service. Proceeding to create a reserve is very simple. Start putting aside a certain percentage of income every month. For example, 10%. Or 15%. This goes in full accordance with the first rule of keeping finances, and in a year you will be able to enjoy a decent amount of accumulated money, which will help you out in any emergency. In the future, part of the accumulated funds can be transferred to a deposit or put into business.
Step 2: Get rid of debts with the highest interest. Sort your debts by debt growth, select the one with the highest interest, and then begin to pay off this debt twice as fast, that is, double payments. Do this monthly until the debt is paid off. Then add the entire amount of the money spent on repayment to the payment of the second debt, until it is repaid. And so for all subsequent debts.
Step 3: when there is a stash in case of emergency, and debts are closed, you can start thinking about retirement. It can be a bank account, investments and any other ways to save and increase capital.
5. Create a budget, just do it right
A budget is the best means of controlling and planning finances, but only if the right approach is taken.
How does a smart person plan a budget? He does this based on statistics from previous months. That is, you can fantasize and say to yourself: “Well, well, I will spend as much on food, and not more.” But then harsh reality will come and put everything in its place. It is better to rely not on assumptions, but on real spending statistics. You keep spending statistics, right? It will help not only to plan, but also to find articles of cost overruns.
6. Optimize all your planned expenses
We get a lot of bills. You can start at least with the same services of a mobile operator. Do you need all connected paid features? There are 50 rubles, there are 20 rubles, 100 rubles somewhere else. In sum, it will turn out very well, and you just give it all away every month. Such general cleaning is useful to do once every few months.
7. Calculate your real earnings
Subtract the tax and all expenses directly related to work, including lunch outside the home, work clothes and similar items, from annual earnings. Then consider how many hours a year you really spend on work, including all overtime and rework from home. Divide the real income by the real number of working hours. That’s how much you actually get per hour of work.
8. Use real earnings as a unit of measure for any purchases
Now it will become much more interesting to buy. The purchase price becomes the numerator, and real earnings become the denominator. This application is equal to two hours of my life. Is it worth it? Does this TV cost two months of life? Maybe it’s better to take the smaller one? Now you can always answer your own question: “What do I spend my life on?”
9. Ignore the “experts”
The media are full of articles from various financial “experts.” However, you will not be able to recall the name of any such expert, to whom the phrase would apply: “The things he spoke about really helped.” The same applies to all kinds of predictors and other advisers.