When it comes to managing your finances, there’s more advice to be taken than it is possible to absorb. Everyone has different opinions about how personal finances should be managed, with different techniques, ideas, and solutions all seeking attention. While it may sound like a plethora of ideas is actually a positive, in most cases — and especially for non-financial experts — the number of ideas becomes overwhelming, and you can quickly find yourself unsure of what is a good idea and what isn’t.
So, let’s provide some clarity. Below are five financial ideas and strategies that are always — without fail — good ideas. If you apply these to your financial management, then you can be confident that you’re well-positioned for whatever the future may hold.
#1 – Learning to budget
Budgeting is not something that comes naturally to most of us, and many people are resistant to the idea. However, budgeting does not mean you have to go without and live on a shoestring (unless you want to!). Budgeting is simple a way of managing your finances and ensuring that you live within your means. Ultimately, learning to budget might just be the best financial decision you ever make.
#2 – Buying insurance
Insurance is the kind of purchase that can seem counterintuitive; you’re buying something in the hope you don’t have to use it. However, insurance is something you will be very, very glad of should you have need for it. Buying home, car, medical, and dental insurance are always going to be good financial decisions.
Furthermore, life insurance policies are inexpensive, but provide a huge amount of peace of mind for both you and your loved ones. If you’re worried obtaining a policy would mean you have to go through a physical, you’ll be pleased to learn that no medical exam life insurance policies are available, so you can sign up and get coverage in a relatively short timespan. It’s also worth considering “loss of income” insurance, which could be invaluable if you suddenly find yourself without a job.
#3 – Overpaying your credit card bill
If you’re the kind of person who receives their credit card bill and always just pays the minimum payment, then your chances of actually paying the balance off are slim. Even if you only overpay your credit card’s minimum payment by a couple of dollars, you’ll still be making inroads into your balance rather than simply servicing the debt.
#4 – Saving a percentage of your income
It doesn’t matter what the percentage is, getting into the habit of saving a percentage of your income is a sensible financial step. When you receive your wage, simply deduct a set amount, move it into another account, and forget about it. If you’re new to saving, then keep the amount low— you’re unlikely to even notice 2-5% of your wages not being available to you to spend. While the amount may be small initially, over time, you could build a nice pot of money, which you can use as the beginnings of an emergency fund or a means of treating yourself to something special.
Financial management can be complicated, so you should find it helpful to have four ideas that are always good sense.