Basics of Money
Money is the one thing which drives the world by all possible means. It is expository to take note of the management of it for all the good reasons. To help with this, rules of thumb are just some loosely applied & tested guidelines, which we use to plan & allocate our funds better. When talking about personal finances, a general advice is to save but it never ends there.
With that being put on the table, few tested rules can prove to be useful for planning your financial life. While you might decide to refine these rules in application, they can be helpful for guiding your financial decision-making.
Here are some financial rules of thumb that will help you plan your budget up to an extent.
Plan the raises you get
The moment you’ve started earning a good salary, which supports a lifestyle you aspire to live, try allocating the surplus funds which are left with you. When you’ve been given a raise, move that to savings, rather than spending it. This can help in avoiding the problem of standard of living inflation, while saved up amount will grow significantly with your proper and regular contribution.
Do you know the 50/30/20 rule?
If you find it difficult to budget , try allocating 50% of your take-home pay to the necessities like food, shelter, utilities. Left 50% will be divided into two section of 30 and 20, to life style goals and to investment and savings respectively. This isn’t a perfect budget, but it can be a good place to begin.
Plan your Emergency Fund
There are alot of speculations on how to plan, but this one makes the most sense for the most people. Remember, these are expenses and not an income And if you’re in a dynamic field of work or the economy is in a not promising enough, consider saving 8 or even 12 months’ worth of expenses.
Save for retirement
The old rule of thumb was to save 10% of your gross income for retirement. That seems to be a little low these days, especially for younger workers who may not have a pension to fill in the gaps. Try to lift the barrel & aim a little higher than that, especially later, if you really wish to be ready for retirement.
Pay off your highest-interest debt first
You’ll find a lot of disagreement about debt repayment methods but this is the one that will prove to be a saviour for you & the most of your debt will get paid off most quickly. The only time you might deviate, if you’re trying to boost your CIBIL score quickly. In this case, first pay off any credit cards that are currently maxed out. Then, pay off debt from highest to lowest interest rate.
Rules of thumb are back- tested and are proven to be the most promising and lucrative options one can opt initially for a shoot start. Later on, the initial approach towards planning only gets better. To know more click here.
An important thing is to have a good start, to stay motivated and see the results of your plans. Try these all out for yourself and you will rest assured that you have quite a lot saved up to cover you and your family in adverse times.
Food 4 Thought
“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.
- Alexa Von Tobel ”
DID YOU KNOW
87% of adults say they are not confident about having money for a comfortable retirement.