Is debt acquired to purchase something that is going to benefit you financially in the future, usually with low interest. That means it's either going to generate income or allow you to make more money in the future.
Examples of good debt:
MORE IDEAS FROM 12 Personal Finance Tips and Tricks to Make You Rich - Swift Salary
You don't have to sacrifice all of your free time to start a side hustle, use the time you’re comfortable with and make a little bit of progress every day.
Get to working on improving your finances today, not tomorrow. Reading the steps and thinking you’re capable of doing it but postponing it is just an excuse, an unprofitable one.
A clear set of goals can keep you motivated and help you plan to reach it faster.
Have different goals for what you want to achieve in the next 3-months, 1 year and 5 years. This way you'll have some short and long-term goals to look forward too.
Take note of all your expenses, subtract them from your income and find out how much you have left per day, so you have a better idea how long it will take to reach your goals.
This will help you see how far purchases are going to set you back and affect your spending ability.
In order to do this, you need to track your spending by either writing your purchases down or using a free personal finance app.
Act as if your savings account is a bill to pay, so you’re less likely to spend it. Automate savings transfers if possible.
That’s the debt that's acquired through purchasing something that depreciates, something that's going to lose value and generate zero revenue.
You can't predict an emergency, but you can prepare for one. The best way to do so is to set up an emergency fund of 3-6 months of living expenses.
Common financial emergencies include job loss, natural disasters and car, house and health issues.
Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.
Net worth is what would be left if you were to sell everything you own and pay what you owe. If you have a positive net worth, continue working to increase your net worth, but if you have a negative net worth, analyze your budget and plan how to increase it.
Make sure to re-calculate your net worth every month or so to keep up to date with your finances.
You should have a savings account, but your money is depreciating if that’s your only investment - average savings don’t yield more than inflation.
Real estate, peer-to-peer lending, exchange traded funds (etfs) and stocks are examples of common investments. Crypt occurrences are also an alternative although risky.
Credit card usage can lead to debt and the debt grows itself while unpaid. However, used responsibly, it's a good way to start building credit.
Most credit cards also have other benefits, such as rewards points, cash back, or travel points. But if you're incapable of paying off the balance in full every month, then you shouldn’t have it.
Create a plan for your money so you know where it's going every month.
A popular and effective way to budget is with the 50/30/20 rule, where 50% of your income goes towards necessities (bills, food, housing, etc.), 20% of your income goes towards savings and 30% you can use freely.
No matter how little or how much money you earn, creating a monthly budget is one of the most important aspects of managing your finances. What gets measured gets managed.
Having a budget doesn't stop you from spending money the way you want it to, but works like a partner to track your spending and allocating resources to help you reach your financial goals.
Your net worth is more important than how much money you make. It’s amazing how many people don’t realize this simple truth. All that matters is how much you save out of your salary.
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