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Taking care of your personal finances is analogous to keeping an intimate relationship. Both entails careful planning for the future, self-control and discipline, and staying zealous amidst challenges. But for now, let’s talk about the how-to’s of nurturing a relationship, rather, to share some practical tips in tending to a sound personal financial condition (although personally, I would rather talk about the former)
So, how to go about in romancing your personal finances? Here are some tips in effectively handling personal finances:
· Develop a plan. Developing a plan does not entail being clinical or stringent to a particular financial model, let us leave these to conglomerates. However, developing a plan involves assessment of current and future needs…
Assessing current income entails a practical knowledge where you stand financially and eventually develop a priority plan. Assessing of expenses includes plotting out of necessities ranging from major expenses to the minor ones.
Developing a plan entails thinking of the future. You need to anticipate income to be generated at the same time expenses that are forthcoming.
Plan ahead of time, this is the main idea here.
· Pay yourself first. Apart from assessing your current and future needs as mentioned in the foregoing, the idea of socking away a portion of your income is imperatively a no-nonsense. A modest 10 percent of your income stashed away in a separate bank account is possible and practically doable. Needless to say, paying yourself first encourages motivation. Rolling out some reserves goes a long way. After all, you don’t work just to pay bills.
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· Come up with a budget and stick to it. Coming up with a personal budget does not necessitate a state of the art computer program to get you going. A simple pen and paper will do. The crucial factor here is sticking to your budget. The perils of being cloistered in a control box is at work here. Thus, discipline is a major factor needless to say.
· Pay in cash when and as often as you can. As much as possible, stay away from credit cards purchases. Believe me, it’s amazing how good that feels.
· Pay off credit cards with the highest interest rate first. For people with multiple credit cards and can’t seem to find a way to pay them all at the same time, here is a practical tip for you. Clearly, there’s no sense in paying off a 2.5% credit card before a 3.5% credit card. Make minimum payments on the 2.5% card until the one with the 3.5% rate is paid off.
· Shop around for the best credit card deals and banking programs. Credit card companies vie neck to neck with the best deals to entice cardholders to use their cards over the competitors. By shaving off a few percentage points on your credit cards or avoiding bank fees by paying on time, you can save significant peso amount a year. However, keep in mind that credit cards should only be used for rainy days, pay in cash when and as often as you can remember…
· Avoid peer pressure. A friend might be able to afford to buy a pair of Manolo Blahnik shoes, but that doesn’t mean you will do as well. Who knows if your friend can and nobody even cares anyway. Take care of your self first and don’t try to keep up with the Joneses.
· Shop for best buys. So okay, you have a disease called “shop-alitis”. The most that you can do is to look around for best bargains. Do away with spot shopping and impulse buying, please. Remember budget. Remember discipline.
· Save a practical worth of income for emergencies. A justifiable three to four months worth of income is practical enough. But hey, don’t touch it unless it’s really an emergency. A forewarn though, saving for vacation or new designer clothes do not constitute emergencies. You never know when you could lose your job, become disabled or sick, or have a major medical or family emergency.
· If you have trouble determining where your hard earned money goes, particularly cash, then keep a spending journal. Document every expenditure for say, at least a two-week period. This will help you in coming up with a budget as well.
So, there you go, some feasible tips to help you keep up good with your personal finances. Easier said than done? Like what I said earlier, it may be less complicated to talk about relationships. But then, if we work on it, then perhaps, romancing our finances can and will be second nature to us.
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