Not
every money-making and the wealth-building tip is out there for everyone to
learn from. Even finance schools leave out so much that people need to know to
make it in life financially. So, apart from being contented with general
financial tips, we asked several personal finance experts to share their best
financial tips that most people have never been taught. Check out what they
revealed.
Budgets are Freeing, not Constricting
Financial educator Tiffany Aliche says, "Keeping a
budget allows you to say yes to your goals in a strategic way.” She
explains that having a budget helps you save for things you can afford at a
given time, for example, a house, vacation, or a car. A budget lets you think
deeply and decisively about giving up McDonald's for your trip to the Bahamas.
A budget is not a plan that says NO. Rather, it’s a YES plan based solely on
achieving your goals.
Avoid Impulse Purchases by Thinking Closely About Large
Buys
According to Marc Diana, CEO of MoneyTips, "Delaying your
purchases for a day gives you enough time to think about whether or not you
really need the items,” and that’s how you can cut down on impulse buys that
you would regret later on. This rule doesn’t apply the same with sale items,
but it’s always vital to evaluate how badly you need a particular item as
opposed to saving the money or investing it. It’s like choosing to have $350 in
your wallet than a seldom worn $350 pair of shoes.
Stick to the 50/20/30 Budgeting Rule
Following suggestions from the co-founder of Your Retirement
Advisor, Lynn Toomey, the following budgeting rule is both easy and workable:
·
Allocate 50 percent of your income to buying non-discretionary
necessities such as food, utilities, rent/house payment, and transportation.
·
Let 20 percent of your income go towards savings, retirement,
paying off debts, and a six months’ salary emergency fund plan.
·
Put aside 30 percent for discretionary (non-essentials) spending
like a vacation, gifts, and entertainment.
No Savings are too Much for Your Retirement
Lynn Toomey, says "Life is good. Retirement is better if you
are prepared." According to her, retirement comes with potential costs
like healthcare, market volatility, inflation and longevity. You may think your
savings plus assets are enough because you don’t know that they are never
enough. There’s nothing more important than starting your savings and
investment earlier, for the longer compound interest has enough to assist you
in having a successful retirement.
Spending Less is not a Ticket to Wealth
It’s not spending less that makes you have more. Besides, it's
good to save to stabilize your finances, however, you have to invest. Aliche,
also known as The Budgetnista, advises that you have to "Pretend there
are two islands." These are "Financially Stuck Island and Wealthy
Island." According to her, you should think of your savings as your car
which you can drive from the Financially Stuck Island to the Wealthy
Island. Investment here represents the bridge between these two
worlds.
Not Only Wealthy People Need Financial Advisors
In the U.S, millions of people have invested trillions of dollars
in all kinds of Wall Street investments such as stocks, mutual funds, and
bonds. However, that doesn’t imply that you can do it successfully too.
President of Your Retirement Advisor, Brian Saranovitz, advises you to
stick to what you do best to earn an income and “ Let a trained professional
invest it for you?" In a recent Vanguard Investments study, it was clear
that if you incorporate proper retirement strategies, that can bring to your
retirement portfolio an additional 3 percent efficient return.
Taking a personal finance decision is not as easy as deciding on
your own to go and see a doctor after breaking your leg. So, lean on
professional help when investing.
Picture Yourself at 80
Never try to disconnect with whom and how you shall live when you
become older. It’s a trap that catches many people. Aliche recommends that you
name your 80-year-old image before you reach there. She says hers is Wanda and
adds, “I imagine Wanda sitting on the front steps in her yard.” She thinks it’s
important to picture herself doing well because she hates to picture herself at
80, mopping floors. So, like Aliche, whatever decision you take today, you
should reflect on how it’ll affect your older self. Digging deep into your
retirement fund to buy an expensive car will certainly hurt your elderly
self. Get a free Retirement Planner to assist you with calculations that
show the time you can go on retirement without putting your lifestyle at risk.
Good Credit Built in a Long Time Can Still Crumble Overnight
Missing a single payment is enough to have you spend seven years
trying to get that black mark off your credit report. And in the period
in-between, what you pay in interest could be more than what you should pay for
all loans with your mortgage included. The credit bureau Equifax reveals
that missing one payment can affect a FICO credit score of 780 by way of a
90-110 point decrease.
Besides, apart from missing a payment or being perfectly
responsible for paying bills, if you become a victim of identity theft, your
good credit will be ruined. Toomey advises that you "Check your credit
report often…” and have any mistakes corrected as you also check for fraud.
Never Co-Sign a Loan
You don’t only vouch for a person’s character when you co-sign a
loan; you also take the risk to shoulder every single payment your partner
borrower may miss. That’s not financially smart as your credit risks being
ruined.
Being Debt-Free Should not Be Your Goal
People are overwhelmed with working their way out of debt, whereas
if they build wealth with that money, it’ll be a smart idea as that’ll help
them to become debt-free faster. Is it better to pay off your student loans and
live debt-free or secure wealth for yourself by investing with the money? Of
course, the latter idea makes more sense. You don’t only want to be a debt-free
person. Be both wealthy and debt-free.
Remember that even without fancy degrees or some special
background in finance, incorporating these rarely taught personal financial tips into your life can make
you an expert at managing your finances.
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