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How financially literate are you? 3 things you should know about your money

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How financially literate are you? 3 things you should know about your money
Most of us received little guidance or instruction in how to handle money, but that's OK, says financial expert Natalie Torres-Haddad.

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Financial Literacy

Financial Literacy

While kids and teens get to learn about a lot of stuff, most families and schools do not teach them how to manage their money. In some families, it is considered a taboo subject and many friends a...

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In And Out

Most of us know how much we make, but we need to pay close attention to how much money is actually coming in post-tax, and how much is going out.

You can start by writing down your Sta...

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Review And Analyse

By noting down all your expenses on pen and paper, or on the PC excel sheet, you can start to review and analyse your spendings on a weekly or monthly basis. This will make you find innovative ways...

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Know Your Scores

Knowing your credit scores and the details of the mortgage, loans and credit card activities that impact it, can help you manage your financial credit. You can find ways to improve your credit ...

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Credit Card Debt

The trickiest form of debt, which is literally bleeding our finances, is the credit card debt. Make sure you know what the interest rate being charged is. Know that a 2% interest r...

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SIMILAR ARTICLES & IDEAS:

The Golden Rules of Personal Finance

  • Spend less money than you earn
  • Always plan for the future: you should always look forward beyond the current month
  • Make your mon...

3 Financial Basics

  1. Create a Financial Calendar: prevent yourself from forgetting quarterly tax payments and to get credit reports.
  2. Check Your Interest Rate: Pay off loans, open saving accou...

Budgeting Like a Pro

  • Consider an All-Cash Diet, as limiting yourself to physical currency combats overspending.
  • Set aside 1 minute a day to check on your financial transactions, to identify problems, track goal progress and set your spending tone.
  • Allocate at least 20% of your income to financial priorities like emergency funds, debts and retirement fund.
  • Budget about 30% of your income for nonbasic spendings, like entertainment. Abiding by the 30% rule, you can save and splurge at the same time.

How to Get Money Motivated

  • Draft a Financial Vision Board, it motivates and helps you to stay on track with your financial goals.
  • Set specific financial goals stating the reason, the way, numbers and dates.
  • Adopt a spending mantra, a phrase that serves as a rule of thumb for how you spend.
  • Love yourself. Taking control of your finances is part of that.
  • Make bite-size money goals. Make the bigger ones but also small step goals to get there.
  • Don’t be a financial fatalist, and switch to more positive mantras.
  • Get your finances and body in shape. The discipline associated with regular exercising translates to managing your money well.
  • Appreciate what you have now, instead of being a consumerist.
  • Get a Money Buddy. Studies indicate people pick up good habits from friends with similar traits.

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How much you should save every month

How much you should save every month

The popular 50/30/20 rule states that you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and 20 percent for savings.

But ...

Why 20 percent is recommended

Assuming you're in your 20s or 30s and can earn an average investment return of five percent a year, you'll need to save about 20 percent of your income so you can reach financial independence when you're older.

Financial independence means that you can maintain your chosen lifestyle entirely from the interest of your investments and dividends.

The four percent rule

The four percent rule states that you could withdraw four percent of your principal balance every year and live on this indefinitely. That means you need to save 25 times your annual expenses to become financially independent.

The four percent rule is not perfect. There is no risk-free investment that yields that much today. Sudden inflation could also cause a problem.

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