60% of people surveyed said they had no idea how much money they spent during the previous month. Many people would say they not only don’t have a monthly budget, but they also don’t really know how to create one either.
If you’re like many people, as an adult, there have been plenty of times when you thought, how come I never learned this in school?
Whether your school curriculum includes anything about personal finance rules or not, most people leave school and just don’t know how to handle their finances.
If you feel like your skills in managing your finances are lacking, then you should quickly do a catch-up. Read on for some basic personal finance rules you need to know as an adult.
1. Make a Budget and Stick to It
When you learn about personal finance, one of the first things you know is how to manage your finances. To manage your finances, you need a budget, which you stick to like glue.
Most people start creating their budget by considering all the income sources they have over a month. If your income fluctuates, you want to plan your budget for the low number, not the high one.
But to create a budget that really works, you need to accurately understand where you must spend money.
2. Rainy Days Happen, Be Prepared
You can have the tightest budget in the world, and it can all go awry if you don’t expect and plan for those rainy days that happen to everyone.
Whatever it is that causes the rainy day, it can send your finances for a loop and put you in a tough spot if you’re not prepared with some money set aside.
In fact, 39% of Americans aren’t prepared for a $1,000 unplanned expense.
As you budget, set aside money for an emergency. Many people even opt to have separate savings accounts, so they know what they’re saving for.
3. Take Advantage of Investment Opportunities
An important aspect of handling your finances is the financial planning needed for investing. If you don’t invest your money, you won’t grow your money.
If you hope to send kids to college or retire comfortably one day, you need to invest and grow your money.
A surprising number of people, for example, don’t take advantage of employer-offered retirement plans, like 401k plans.
Not only can you invest your own money tax-free, but you also can often get matching funds from your employer. This is basically free money for your future, and not signing up for this account is sacrificing that money.
4. Fund Your Emergency Fund
A surprising 65% of Americans say if they suddenly lost their job, they couldn’t cover six weeks’ worth of expenses.
In even the most robust economy, you need to be prepared for the possibility of not having an income source for a period of time.
Experts suggest you save and set aside between three and six months’ worth of expenses to keep you afloat while you seek another income source.
5. Track Your Expenses and Spending
Earlier in the section about making a budget, it was suggested that you identify your expenses. Of course, this includes things like your monthly bills and expenses to feed and care for yourself and your family.
You may spend more money than you realize. Yet, many people fail actually to track their spending at the same time. From stops for coffee in the morning to travel or kid-related expenses like soccer shoes, your spending can wreak havoc on your budget if you don’t monitor it.
Personal Finance Rules You Need to Know
The more you learn personal finance rules and apply them to your life, the more quickly you can begin to grow your wealth and plan for the future.
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