Finance tips may seem to be boring when you are young. But as you step into practical life these very finance rules are among the first things that you consider.
Crisis, emergencies, and bad times never warn before hitting. They just blow in like a sharp, stinging gust of wind and shatter things. It is good to be prepared beforehand for any of these things that may come by, especially in financial matters.
One of the main finance tips to spending unassailable, secure times ahead is the need for keeping an eye on financial matters. Along with the need to feel and be safe physically, mentally, and socially, being secure financially also plays a crucial role. In fact, in realistic terms, if one is not secure in financial terms, it may disrupt the other important factors of life. Thus, if your elders have taught you to save for emergencies, it is one of the best finance tips they could have ever informed you with.
Saving and investing is crucial to life. No one knows when a heavy tide might hit and catch you by surprise, and that's where following these finance rules comes in handy. No matter how much you earn, you always need to have some cushion amount by the side that would soften the blow. And yes, saving in general and saving for emergencies are two different things. Keeping track of how and what you spend is an essential life skill.
Here Are A Few Best Finance Tips For Everyone.
One: Never Break Your Emergency Fund
There is a difference between savings and having an emergency fund. You could be saving for a house, you could be saving for a car, or you could be saving to pay for college. An emergency fund is what you keep aside for ‘emergencies’. Situations when and if there appear to be a shortage of money, for example amid a crisis. It is the money that you save to use when and only when an actual, real emergency pops up. And no, it cannot be used for shopping.
One of the best finance rules for college students especially is keeping aside some amount in case such a situation comes up. Never make the mistake of breaking your emergency fund. Instead, make sure that you spend way lesser than what you earn. In a world that is dominated by showing off and owning expensive things, you could be that one person who relishes simplicity in life.
Now it’s not entirely that you do not spend at all, it’s just that you can be a little considerate about how and where you spend. For example, think about how you earn and how hard would it be if you happen to lose your job. In that case, you could thank yourself for keeping some amount aside that helps you through that time.
Two: Keep Aside Some Amount For Your Long-Term Necessities
If you wish to buy a house or a car, or even a piece of land in the next 5 to 10 years, you have to start saving now. Yes, right now. When you decide to invest in an asset, it is bound to take off a huge chunk of the money that you have. Thus, it is wise to save for those particular needs way ahead of time.
Moreover, amid a crisis, these assets can prove to be more beneficial than others. These assets have high liquidity and can aid you in the long term. This way, you always have the option to liquidate your assets for instant cash in case of a financial strain.
Look at it this way: On the one hand, you have a lot of expensive clothes - many of them are one-of-a-kind pieces. On the other hand, you have a car or some gold. Your expensive clothes, which in normal circumstances would be sought after, are of close to no use in case of an emergency. While your assets like gold and that car you own would be much more valuable and much easier to liquidate.
Three: With Investment, Also Come Risks
Investment also has risks. While it is a good option to invest in high-risk assets such as stocks and cryptocurrency, be aware that these are subject to many factors. These factors could either be good, or simply worse.
Related: Cryptocurrency Downfall - Bitcoin Falls by 6%
Make sure that you take your time pondering over any investment that you wish to make. Carry out a complete risk assessment and have a risk-management plan at hand.
Four: It Is Not Necessary To Communicate Every Detail With Everyone
Financial matters are often shared with close confidants. However, it is not necessary to share every detail of the matter with everyone. One of the best finance rules is to keep some crucial information private in case you have to take drastic steps amid a crisis.
The founder and CEO of New Retirement, Stephen Chen, advises that it is important to keep things simple. As complex as money matters are, it is not important that you add to the complexity.
Five: Pay Attention To Your Spending Habits
When you have some amount at hand, it may be difficult to stop and think about spending. Spending can be tempting. Thus, when you do have some extra cash at hand, stop and think about where and how you spend. Because if you don’t, the next question you’d be asking is ‘where did all that money go’?
Moreover, one of the major finance rules is to spend less and earn more.
Key Takeaways
- Keep track of your finances
- Do not get into a habit of reckless spending
- Keep aside a fund for emergencies
- Use that emergency fund only in case of emergencies
- Invest in assets that you can easily liquidate amid a crisis
- The major takeaway here would be to follow these finance tips
With some of these best finance tips, you can get your financial freedom back on track. All you have to do is analyze how you were financially stranded when a crisis hit. You learn a great deal from experiences, but make sure that you remember those lessons before you put yourself into a similar situation.
