How financially literate are you? 3 things you should know about your money
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 to save money, catching hold of ‘runaway spending’ that went unnoticed before.
Example: You could find that the $5 Smoothie that you had every day, could cost much less if you made it at home.
This is a professional note extracted from an online article.
Read more efficiently
Save what inspires you
IDEA EXTRACTED FROM:
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 are too busy showing off to help others manage their finances.
Even the basics of financial literacy are not taught at an early age, resulting in many of us falling into the trap of consumerism and debt.
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 Starbucks, Uber, Amazon, and take-out expenses, along with your car insurance, utility bills, subscriptions and memberships. Slowly we can realize that many of these small expenses add up to huge figures.
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 score once you check it for free using a variety of apps and websites available.
Before you take a big loan, it is advisable to check your credit score in all the available agencies in your country.
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 rate per month is actually 24% per annum.
If you stay out of debt by paying the total due on time, and not compound the interest, having a credit card with a good score can affect your credit score in a good way.
SIMILAR ARTICLES & IDEAS:
8 more ideas
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.
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 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.
4 more ideas