Spend Less than You Earn
This is the most crucial guideline in personal finance. You must spend less than you make and save the difference to continue to exist and prosper when you are older and no longer have the opportunity or energy you do now. You cannot attain significant financial success without some luck if you do not follow this guideline, but you should never be dependent on luck in your future goals.
Keep it as Simple as Possible
The more credit cards you have, the more likely you will be a victim of identity theft and miss a payment. The more financial accounts you have, the less time you must pay attention to each one, and the more likely you will overlook anything crucial. The more funds and investments you have, the more time and energy you’ll need to keep track of everything, and the more likely you’ll make a mistake.
It would be best if you simplified everything. Don’t keep too many cards in your hand. Make sensible investments. Consolidate your debts if possible.
Never Let Your “Future Self” Take Care of Your Current Situation
The more cash cards you have, the more likely you will be a victim of identity theft and miss a payment. The more the investment, the better. Have you ever convinced yourself that it’s OK to make a poor financial decision now because you’ll make more money later? It is a colossal blunder that you will almost always regret for a long time. Sure, your future self may have more money, but it’s also possible they will have less money, putting you in a difficult situation. Even if you are doing well in the future, you will undoubtedly have other significant expenses to cope with, such as purchasing a home.
Permanently Save for a Rainy Day
It should be your priority if you don’t already have an emergency fund in a savings account at your local bank. Cash is one of the most common means of resolving all of life’s issues. Unlike a loan, your money will always be available in a savings account, and you will not be charged additional interest. Set up an automated weekly or monthly transfer of funds from your checking account to your savings account to begin creating an account and leave the savings alone unless you need them in an emergency.
Prioritize the Right Ways to Pay off Your Debts or Loans
Prioritize the repayment of funds at a high rate of interest. Make a simple debt repayment plan by dividing your obligations by interest rate, and then strive to pay off any debt with the highest interest rate twice (or more). Make this double payment every month, then add the total amount of this payment to the price you make on the following loan on the list when that debt is paid off. Repeat until the costs are no longer due.
Focus on Saving for Retirement
You should never overlook one of the most important financial principles. Pension contributions are mandated for all employed inhabitants of Kazakhstan. However, most firms strive to save money by avoiding unnecessary charges and registering their non-employees informally, indicating modest earnings in the white bookkeeping and paying the remainder through the “black” cash desk. Employees have been known to refuse mandated pension contributions to have a bigger “on-hand” sum than is legally required. Paying a few percent of your salary may appear to be a burden, but it’s a lot less than you think, which adds to the joy of knowing you’ll be collecting a pension.
Buy Insurance to Keep Your Family and Kids Safe
Don’t be fooled by the insurance salesman. If you don’t have any dependents, you don’t need a lot of life insurance (people other than you whose well-being is directly dependent on your income). If you have dependents, your best choice is to purchase a life insurance policy that will pay out enough money to support them if you leave too soon. All these other insurance policies provide services you don’t require and charge us a lot of money.
Get Your Budget Right
A budget can be a good tool for keeping track of your costs, but the most valuable aspect of budgeting is the process of creating it. You create a budget based on actual expenditures over the preceding few months. What’s the best way to go about it?
How much do you consume on food in a month? Entertainment? Expenses incurred by the community. Is that your vehicle? Obtain accurate figures. Check your bank card statements to see what’s going on. This method will quickly reveal the areas where you overpay; however, simply keeping a checkmark budget will show nothing.
Be Mindful of Your Bills
At this time, you must pay close attention to your bills. Subscriptions to numerous services on the phone, in apps, and on websites are the most obvious example. Cancel your subscription to any unwanted phone services that charge you monthly fees. All “hidden” payments are treated the same way. It’s better to pay attention once more than keep paying for services you don’t utilize.
Know How Much Money You Make in an Hour You Put into Work
Subtract any travel expenses, professional attire, work-related meals, and other out-of-pocket expenses from your last year’s earnings after taxes. Then, sort out how many hours you worked (including at home), how many hours you drove to work, and how many hours you spent at other business meetings. To calculate your real hourly wage, multiply your revenue after expenses by the total number of hours worked. It is the price you’re asking for an hour of your time.
Use the Result of 10 Points as a Point of Comparison for Everything You Buy
The real hourly wage, in my opinion, is a precious number. Almost everything I purchase is compared to my number. Assume my “real wage” is $10 per hour. If I’m considering purchasing a $20 CD, I think owning it is worth two hours of my time when I could rent it. If I’m considering buying a $1,000 television, I believe that 100 hours of my life would be worth it if I could have a little tv instead. It almost always inspires me to think about where I spend most of my life energy.
Don’t Fall for “Professional” Financial Advisors
Articles in the financial press frequently feature various “experts” promoting “hot” stocks and “profitable” investments. All of this is lost on me.
To begin with, these individuals frequently have a significant conflict of interest. Second, the ins and outs of numerous companies and industries are just too complicated for an outside equities analyst to fully comprehend, especially given how much information is kept hidden from them. Third, even if their forecasts are correct, the company they work for will nonetheless act on that information, resulting in (at best) leftover notes. Ignore everything.
Ignore “Professional” Economic Forecasts
Economic forecasts should be treated with caution in the same way. These forecasts are frequently incorrect, and even when they are correct, they are rarely reliable markers of what you should do with your professional life or your money. Do not make personal financial decisions based on predictions for the future. If you’re anxious about the future, you should start being more cautious with your investments now; it’s the only change you should make in the face of economic forecasts. However, it has less to do with financial projections and more to do with your risk tolerance.
Set Big Aims and Keep Reminding Yourself of Them
What do you hope to achieve in the future? It is a difficult question, but it can provide tremendous drive and direction for your everyday activities, urging you to take more significant actions.
Do you want to enjoy a comfortable early retirement? Do you want to establish your own company? Do you wish to go on a round-the-world trip? Always keep that in mind, whatever your goal is. Fill your life with reminders of your primary aim so you may make the most significant decisions possible in line with it when it comes to all of life’s little decisions.
It is better to rent an apartment if the cost of your house is significantly higher than the rent.
Each of us wishes to own a home, but if doing so would entail more significant monthly payments than rent, it is usually best to postpone the purchase. Renting a house and saving money for a down payment is preferable to buying a place where your expenses – mortgage, property tax, maintenance, utilities, and more – considerably outweigh the cost of renting a home.
If you decide to buy a house, it’s best to get the best deal for you so you don’t get buried under a massive monthly mortgage payment.
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