In this modern life, we all have problems which sometimes related to the relationship, sometimes related to money. In fact, we all are facing troubles as finding a job, repaying loans and making a solid financial decision. Without the knowledge of finance or the financial preparation, a lot of people sunk into debts. Here is guidance for those who are in personally financial troubles.
Start with budget
To keep your spending under control, start with a budget. If you have no idea how to create a budget, here is a look at how you may want to allocate your funds. Upon researches, we may generally spend about 40% of monthly income on housing and utilities, 15% on food, 5% on car insurance and personal expenses, 10% on transportation including car loan, 10% on clothing and entertainment, finally 20% on debt repayment and savings. The above figures may not fit with everyone but it may enable us to compare, collate and examine our own monthly spending to see what areas we should focus on cutting down.
Being financially responsible consists of more than simply organizing your spending habits. It means that you have a strong hold on your financial accounts. Most people have three different financial accounts as your checking account, a savings account and credit cards.
Often your employers will direct deposit your paycheck in the checking account so this account should be used for short-term expenses which tend to be paid daily or monthly including car and students’ loans and apartment rent.
Credit cards are optional but they do help you build a good credit history. Credits cards are normally used for food, gas, etc. If you use a credit card, use ones that offer rewards or features you will able to take advantage of.
A savings account is for long-term expenses. It also serves as a holding area until you decide where to put it, such as in retirement, saving for a vacation, or an emergency fund. Savings accounts acquire a small of interest.
Long-term budget goals
Everyone, who is either or poor, should set long-term goals for yourself. How you handle money over the next few years is vital. Here are some suggestions that can be beneficial in the long-run. First, you need a career path instead of a temporary job which just only helps you to pay bills. Second, you also ought to build an emergency fund. It means that you need prepared for the unexpected normally by saving money for at least three months worth expenses. Third, you also need to self plan to repay your debts (loans and credit cards) instead of totally trusting the bank repayment schedule. Only you could know your capacity of paying debts. Finally, you should start a retirement account as soon as you reach thirty. Thinking of one day when you are not able to work or even use your own legs to go makes a retirement accounts essential. It is good to plan for long-term goals early by putting even a small amount of money away each month and adding up.