Invaluable Rules Of Thumb For Managing Your Money

No matter what position you are currently in with regards to your finances, it is always important to make sure that you are managing your money in the best possible way. This leads not only to a much better bank balance, but an easier life in general, as the healthier your money is the easier it is to do all the things you want to. You will also find that this makes for a much less stressful life on the whole.

So how do you make sure you can claim all of these benefits for yourself? In this post, we are going to take a look at some of the most important and truly invaluable rules of thumb you should always try to follow if you are keen to manage your money effectively.

Save At Least 25% Of Your Income

It is clearly important to save as much money as you possibly can, but how can you be sure if you are really saving enough or not? One good rule of thumb to help you out with this is to save at least 25% of your income. That is not merely an arbitrarily chosen figure: the statistics tend to show that putting aside 25% of your income gives you a significantly better chance of ending up with enough money for your savings overall, whereas less than that might mean that you end up dipping into it. This takes into account the fact that different people earn different amounts, too.

In fact, this rule proves to be so important that it is actually more relevant than other issues related to saving, such as what kind of savings account you have or what percentage interest it gives you. As long as you save over 25% of your income, you are going to notice the difference.

Follow The Rule Of 10

Nobody says that you can’t ever spend money on big purchases – after all, you might need them sometimes, and even when you don’t you might want something that is going to improve your life in some way or another – and who can argue with that, at the end of the day? However, whenever you are thinking about buying a big purchase of any kind, one thing that you might want to do is to follow the rule of 10. Here is how it goes.

Essentially, the rule of 10 is a way of protecting yourself against the possibility of regretting a financial decision or purchase you have made. All you need to do is ask yourself and imagine what you will think of that new purchase in 10 days, 10 weeks and 10 years. If you are buying a luxury car, in 10 days you will be merely excited. In 10 weeks, you will just think of it as another one of your possessions, nothing special. In 10 years, you’ll have forgotten it entirely.

Seen in this way, there might be times when it becomes obvious that the best thing to do is simply not buy the car.

Claim What’s Yours

A big part of the reason that many people end up in a worse financial position than necessary is because they fail to simply claim what is truly theirs to behold. You might find yourself doing this out of embarrassment or out of fear of what someone might say, for example. But as a general rule, it’s much better to simply claim what’s yours when you can, so that you are going to end up in a better position overall. That is clearly the best approach, and it ensures that you are not going to struggle with your finances as much.
There are times when it might seem particularly sensitive and you might fear asking for what you are owed. For instance, you might be poring over a will with your family, and there might be disagreements about it. In such cases, having professional help with estate litigation is often the best way to resolve the issue, not just for you but for everyone else as well. Remember to get the kind of help you need when you need it, and you will be able to look after your money better.

Keep The Ideal Emergency Fund With This Rule

Everyone should have an emergency fund, for those times when everything falls apart and you still need to be able to pay your way. In order to do this right, you need to make sure that you are aware of how much you need, and that is obviously not always easy to do properly. However, a good way to do it is this: simply work out how much you would need for all of your basic essentials for three months, and then work to put that much aside as soon as possible.

As you figure this out, bear in mind that you won’t necessarily need to pay out as much as you currently do each month. We are talking about a genuine emergency here, so that means you’ll probably be able to change certain payouts in your average month. For instance, you might move back in with your parents, or change where you shop for food. So what you are looking for is the essential basic amount you might need for those three months.

Once you have figured that out, you need to find out how much you are going to need to put aside each month in order to put that money aside as soon as possible, while not putting yourself in trouble in the meantime of course. Once you have got that in mind, you’ll be able to get that emergency fund, and probably sooner than you think. That is one of the best things you can do for your finances.

If you can follow those rules of thumb, you are going to find that managing your money is a lot easier indeed. So make sure that you are at least considering these things in the best way you can.