Each of us holds different views about money. While it is not an all-embracing solution to our problems, it absolutely relieves discomfort to make us live fulfilling lives. We can’t all be millionaires, but we can desire to cover our basic needs, save for the future, and have disposable income for leisure. To do these, here are five golden rules for better finances:
1. Spend less than you earn.
It’s not enough to live within our means because it may indicate that we can spend on things even if these amount as much as our budget. The better way is to always make room for savings. It will be counterproductive to impose a particular percentage of savings because everyone has personal circumstances and contexts to deal with. For as long as we get to save, we are well.
2. Comparison is a no-no.
Don’t keep up with the Joneses--some of them are also keeping up with other Joneses--and this cycle is unhealthy for finances. Just because someone bought a nice car, we should also get our own, too. One should determine what’s personally important, and act towards its achievement.
3. Pay debts.
We should pay our debts especially the one with the highest interest. Debt can suck us up because we have to pay way more than what we owe. It is critical for us to clear our debts, so that we can channel our money towards what’s essential.
4. Build multiple streams of income.
It is understandable that in some cases, one job just can’t cut it. The key is to build other sources of income. By build, we mean we should create and accumulate these sources. It can be through investments that can earn for us passively or a side hustle that we do in our extra time.
5. Be prepared.
Life is unpredictable. Normal days can alter the course of our finances. We should deal with uncertainty by being prepared. One should anticipate unlikely events when an emergency fund is necessary.
American businessman and author Dave Ramsey said that “personal finance is 20% knowledge and 80% behavior.” While it is important to know how to have better finances, it is far more critical to act. The key is to act on these golden rules NOW.