4 Financial Tips for People of All Ages
Understanding how to manage your money is important to your financial success. However, most people don’t learn the basics of personal finance in school. Those who do probably forget most of what they’re taught before getting their first “real” jobs. Here are four personal finance tips that will help you live comfortably now and in the future no matter what age you are.
Use Self Control
Impulse buying is a temptation everyone falls victim to every now and then. Credit cards and loans make it easy to buy something as soon as you want it instead of saving for it. That’s not to say that buying on credit is always a bad thing. Most people can’t afford to buy a car or a house without getting a loan. For everything else, ask yourself whether you really need it. “Do I really need this new pair of shoes? Am I willing to pay interest on the latest and greatest tablet when my current one works just fine?” Credit card spending is a bad habit to get into unless you can pay your bill in full each month. Otherwise, you may be paying for the items you purchase with your credit cards for several years.
Here’s a trick I used for many years. I would ask myself if I would take out a loan for this purchase. The answer was usually “no” — especially when I was going out to eat. But when you use a credit card for your purchases, that’s exactly what you’re doing. The next time you reach for your credit card when buying a sandwich ask yourself if it’s worth taking out a loan with a high interest rate.
Take Control of Your Finances
Many people are intimidated by financial matters, so they consult with others for advice. Some people get great advice. Others don’t. Some fall victim to financial advisors only interested in making a buck. Some fall victim to well-intentioned Uncle Henry who made his fortune 50 years ago but isn’t in touch with today’s financial realities.
Take control of your finances and read a few books from reputable personal finance authors. How do you find reputable authors? Do some online research. Many contributors to Money, Fortune, and other reputable financial websites have written books. Avoid authors who write about “getting rich quick.”
I have heard a lot of great things about Dave Ramsey’s book, Total Money Makeover. You can buy a copy direct from his site here.
Start an Emergency Fund
“Pay yourself first” is something most financial planners advise. No matter what you owe to others, create an emergency fund and put some money it every month. It doesn’t matter how much. Budgeting a specific amount from each paycheck is the best way to build your emergency fund.
Your emergency fund will help you pay for large, unexpected expenses instead of relying on credit cards or loans. Saving for emergencies will help you save in general. Soon you’ll find yourself saving for vacations, a new home, or even retirement. Remember, no one asks for disaster, but things happen. Better off being prepared.
Guard Your Health and Wealth
Rising medical costs are certainly making insurance premiums higher, but think about how much a trip to the ER could cost you. That broken arm might cost you thousands that you don’t have and put you at risk financially. Take a little time to determine how much health and medical insurance you need and shop around for the best rate. Then take care of yourself. Eat healthy and get regular exercise.
Once you’ve protected yourself, protect your assets. Be sure you have renters or homeowners insurance. Don’t forget about disability insurance which will protect you if you’re unable to earn income. Many companies offer disability insurance to their employees at a minimal rate through payroll deduction. Find out if your employer offers it and take advantage of it.
I learned the value of these benefits after my motorcycle accident. I was very fortunate that my employer offered this type of coverage because I was able to pay my bills while I was recuperating.
What tips or advice would you offer?