Friday, November 7, 2014

Four Financial Skills you need to Master

For many people the idea of having more than enough money may seem foreign to them. According to a recent UK money habits study, 53 percent of people in the United Kingdom struggle to make their monthly payments and only 46 percent of people have a monthly budget. 

It is possible to have enough money to pay your bills each month and build up a healthy savings account as well as a retirement fund. 

But, if you want to become free from financial stress, there are financial skills you need to master first.

If you are on a low income, make sure to take advantage of money help such as grants and benefits, this can reduce certain financial pressures which can help you avoid the temptation of loans, especially short-term loans.

Pay off your debt:

One of the first things you need to do is pay off any debt you have. If you don’t have any debt, keep it that way. Credit cards and loans can be tempting. The idea of paying for something later is appealing, particularly when you aren't making very much money. The problem with this is that interest rates compound daily which means you could end up paying a lot more than what you actually spent.

If you are currently in debt, cut up your credit cards and start paying down your debt as quickly as possible. Say goodbye to paying extra fees and interest rates for things you've already enjoyed.

Have a budget:

You cannot be financially successful if you don’t have a budget. Unless you are using 100 pound notes as dish rags (and if you are, stop it and send a few our way…) you need a budget so that you know how much you make and you know how much you spend. 

Trying to become financially sound without a budget is like trying to build a tower without instructions, you may be sort of successful, but you’ll have success much faster if you have a guide. Kick Jiminy Cricket to the curb and let your budget be your guide.

Live on less than you earn:

This principle actually ties in really well with paying off your debt. One way to avoid debt and to avoid the strain of living month to month is to start living below your means. Basically, spend less than you make. If you always spend every pound you have, you’ll never have anything left over to invest.

Credit cards give you a skewed perception of how much money you actually have, which is why so many people up end deep in credit card debt. The money you are spending isn’t actually yours. Look at your income and find ways to reduce your sending so that you can save at least 10 percent each month.

A simple trick to living below your means: automatically deposit a certain amount from your checks each month. Withdraw it in cash and store it under your mattress or transfer it to a separate account that’s more difficult to access. Pay yourself first.

Invest wisely:

Once you have eliminated your debt, work on a budget and spend less than you make, you can begin making investment options. Investments make your money work for you. Because investments can be tricky, and even a little scary, it’s usually best to work with a professional advisor who can help you create the right investment portfolio. 

A simple rule to remember: diversify. You’ll still earn money on your investments but with a much lower risk. Essentially, don’t put all your eggs in one basket.

1 comment:

  1. Thank you for sharing article! It's very interesting. Hope to hear more from you.


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