10 Best Financial Philosophies to Improve Your Personal Finances
In one of the previous articles related to Financially Responsible Person traits, I had mentioned few characteristics of a Financially Responsible person.
It’s important to know what it takes to become a Financially Responsible person and live a Financially Stable Life. Following are some best Philosophies which proves that you are a Financially Responsible person. Read on to know more.
1. You are responsible for your own wealth
Your Financial status at any given point of time is due to the series of actions you have taken in the past. It’s the small steps that count to give desired results.
Whether it is taking a mortgage for vehicles or creating an asset, whatever you do to make your Financial life better, have consequences.
“Good Debt makes your Financial Life better. Bad Debt makes it worse. Know the difference.”
Know what’s the difference between Good Debt and Bad Debt, what are your Assets and Liabilities and how you make decisions in everyday life. These decisions are going to stack up and form your Financial Status 10–15 years down the line. You yourself are responsible for your Financial Status at any given point of time in your life.
2. Getting out of debt is an emergency
Alright, so you know the difference between Good Debt and Bad Debt. Good Debt is something that will help you increase your income, it is taken to buy Assets. Bad Debt is used to buy Liabilities.
“If you are in any kind of Debt, just remember one thing. Coming out of your Debt should be your top priority.”
3. Always take free money
Your employer provides you with a matching 401K plan, take maximum advantage of that contribution.
“Never say no to Free Cash. Take maximum advantage of your 401K plan and make your employer pay maximum contribution towards that plan.”
Even when someone is offering free cash, never say no. May be he doesn’t know the value of a dollar, but you should. Always accept free cash.
4. Super frugality is a waste of time and money
There are several blogs and podcasts that teaches you how to be super frugal and create everything by yourself. It doesn’t work always. Sometimes it’s your waste of time and resources.
“Don’t try to create soap at home by yourself. It is inexpensive and saves time if you buy it from local shops. Don’t be that frugal.”
Live and enjoy your life. It’s OK to spend some Dollars on entertainment and other stuff that makes you happy. Don’t be in saving mode throughout your life.
5. Credit cards make spending cheaper when correctly used
Credit cards usually have cash backs in the form of points. Take maximum advantage of your credit card’s features. But at the same time, use it wisely.
“Most of the items we purchase are not required, with money that we don’t have, by using our Credit Cards.”
Pay credit card bills in full and on time. Use it wisely and purchase only required things. Don’t buy unnecessary stuff just because you are getting free cash temporarily.
6. Avoid bank fees
Avoid having savings or checking accounts in Banks that charge you. Banks should not charge you to have your money with them.
They give your money to others and make more money, and charge you as well. Stop having accounts in Banks that charge you with different fees.
7. Automate your finances
Prefer automatic payments of credit card bills, utility bills and other bills which can be automated.
This not only saves time and energy but avoids penalties in case of late payments. Let the software do it’s job and set for auto-payments of bills.
8. Savings Accounts are stupid
You get less interest in Savings accounts. Keeping huge chunk of cash in savings account isn’t wise when you can get more interest money somewhere else.
Invest in liquid or debt funds and close your savings account.
9. Materialism inhibits wealth building and leads to debt
Don’t be a materialistic person. Don’t buy things that you don’t need.
Such things will eat your money, time and energy and avoid you from focusing and building your wealth. Follow the principle of ‘less is more’. Avoid buying unnecessary stuff and have less material things. It will save your time and money.
10. Budgeting makes smart people smart with money
Having a Budget has proved to be one of the ways to become smart in financial planning.
You should know your spending patterns and where you can cut your unnecessary expenses. There are many free apps available of play stores that will help you to have monthly budget.
I’d love to hear from you if you have any queries about Personal Finance and Money Management.
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Originally published on FinCalC Blog