.15 Personal Finance Rules to Live By

15 Personal Finance Rules to Live By

The following is a guest post from Marc at VitalDollar.com.

Have you ever wondered what separates those who are successful financially with those who are not? Have you felt like your income should allow you to live a much more comfortable life than what you are experiencing?

Personal finance doesn’t have to be complicated. There are a few basic rules that you should follow, and if you do that, everything else falls into place.

This article covers some of the most basic and most powerful financial rules that should impact your everyday life.

1. Spend Less Than You Earn

Arguably, the most important financial rule is to spend less than you earn. Regardless of how much money you make, it’s impossible to get ahead if you’re spending it all. Even worse, you could be going backward and accumulating debt if you’re spending more than you earn.

Lifestyle creep is when your spending increases at the same rate as your income. Ideally, as you progress through your career your income will rise. If you’re able to minimize lifestyle creep and keep your expenses at the same level, you’ll be able to save and invest the excess.

Ultimately, how much you keep is far more important than how much you earn. Someone with a $50,000 income can wind up in a better spot than someone with a $500,000 income based on how much is spent and how much is kept.

2. Know Where Your Money is Going

Establishing a budget is common financial advice. A budget gives you control over the way your money is spent, which helps you to make the most of the money that you have.

While budgeting is important, it’s equally important to track your expenses. If you’re not tracking your expenses, you won’t know if you are truly sticking to the budget.

Knowing where your money is going is a critical aspect of managing your money wisely. If you haven’t budgeted or tracked your expenses in the past, it can be an eye-opening experience.

When you see how you are really spending money, you’ll probably be able to quickly identify a few areas where you’re spending too much and could easily cut back (with a little bit of discipline).

3. Avoid Impulse Purchases

Most people spend their money based on emotions. Impulse buys can be small things (like picking up a few items when you’re checking out at grocery store, or it can be bigger things like a timeshare.

Large impulse purchases can obviously have a damaging impact on your finances, but even the small purchases add up.

To get control over the small impulse buys you can commit to grocery shopping with a list, and sticking to the things on your list.

For larger purchases, get in the habit of waiting at least 24 hours (or longer, if possible) before making a buying decision. When you take time to evaluate the purchase based on all of the factors involved, you’ll often find that you don’t really want or need that thing that you almost bought. You’ll reduce buyer’s remorse and keep more money in your pocket.

To continue reading, please go to the original article at

https://www.freemoneyfinance.com/2019/07/15-personal-finance-rules-to-live-by.html