Personal finance tips that will change your life: part two

This article is a continuation of last week; Last week I shared three financial tips that will help you become financially stable; Avoid co-signing loans, make saving a habit, and review your bank account transactions frequently. This week, I’ll share five more personal finance tips that will change your life:

Spend within your means – It is well known that most of us spend more than our income which leads to debt and stressful life. We have to start learning how to live within our means. Most of us are not used to living within our means. We can learn how to spend within our means; This does not mean buying less and cheaper goods but planning our spending wisely. Learn to spend within your income and you will avoid many money problems.

Don’t borrow money you can’t afford – In an ideal world, everyone would have enough money for his/her needs but that is not the case so some of us have to borrow money to meet our needs. But unhealthy borrowing can cause you serious problems that can affect your finances and hence your life. Don’t borrow too much and if you do borrow, make sure it’s within your limits and can pay it back easily.

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Don’t borrow money you can’t afford to lose – Here is the rule of thumb in lending money to people; If you can’t afford to lose it, don’t borrow it. For example, if someone wants to borrow some money from you and you want to use that money in the near future, don’t borrow it. My advice when you decide to lend someone money is don’t expect to get your money back. This will save you the headache of chasing down someone to pay you back and prepare you financially for the worst.

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Have an emergency fund – We never know what might happen to us and we must be prepared for any time life happens (eg, job loss, car breakdown, etc.). An emergency fund is very important because it can keep you afloat in times of need without relying on expensive short-term loans. So how much should you save for your emergency fund? A good rule of thumb is to have an emergency fund that will cover six (6) months of your living expenses. It’s never too late to start building your emergency fund so start saving now!

Find a financial advisor – Even if you don’t have any assets or enough money, it’s always good to seek advice about your finances. A financial advisor will help you identify your financial goals and guide you in the right direction on how to get there. Don’t wait until a crisis hits to seek financial advice, do it now.

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In conclusion, I want to reiterate that you don’t need to be rich to be in control of your finances. In today’s world, financial literacy is more essential than ever; Whether you are rich or poor, managing your finances is essential to a life of financial stability. I know at first it can be difficult to plan and live your life according to your financial goals, but gradually you will be able to ensure that every life choice, brings you closer to your financial goals. If you’re still reading this, I’m going to assume you’ve decided to take your financial life more seriously, so start now!

Calvin Makwawa, MBA is a seasoned banker. He can be contacted through the email address: [email protected]

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