The amount you earn has to be spent as living expenses exist. The desire to grow wealthy beyond your means also exists. Savings is the weapon to achieve it, and careful planning is most important. Please find below ways of accomplishing this as personal finance tips for beginners.
Begin Early:
Everything in life is about early starts. Saving money is no exception to this rule. Irrespective of the amount you can save, the habit and attitude to saving are essentially combined with an early start.
A plan of action does not require a big plan, but the early kick-off matters. It may be in trickles first, but the savings compound into a more considerable value with time passing by, and it is the result that matters in the long run. Delays in such matters would never help, and procrastination would result in lesser savings only and is the best personal finance tip for beginners.
Prioritize Saving before Spending:
As a growing child, your parents must have taught you the value of money. Moreover, they would have inculcated inside you the thought that to spend money which you have with you. Nowadays, credit cards are available to you, which can reverse your policy of saving. The idea to purchase on credit cards is good provided you pay up the purchase amount before a month or the date the bank starts levying interest.
Just imagine you purchased a Television set and you are paying interest every month! The Television becomes a costlier investment, and there would be excess cash outflow.
The cardinal rule is to allocate the savings and reduce that with your income. It's a bad idea to spend first and save whatever is leftover.
Be Your Own Financial Advisor:
Saving money is only a part of the deal. The other part lies in managing it wisely. There are many ways to lose those savings, as others become aware of your wealth. They may advise you to invest in profitable ventures, but their end-interest is only the commission they earn through it. As a personal finance tip for beginners it is best to do your research and analysis by acquiring knowledge through the internet or direct investigation and then decide.
On the same note, it's advisable to keep more than an eye on your bank accounts. You can trust Banks to a large extent, but even they may charge you arbitrarily. In such cases, if your account is debited, you can approach the bank and have it reversed. Thus, you become the Finance manager of your savings.
Budgets:
You may not be in the habit of noting down your cash inflows and outflows. You would be shocked to see that your savings are going down at the month-end even though you have been cautious in spending money.
The only solution is to budget your expenses initially and keep checking on them, not exceeding them. All expenses have to be meticulously noted down, and you would soon know the excessive expenses. When precautions are taken, you can achieve your goal of savings.
Health Insurance:
You cannot be confident that you will stay in good health always. Neither can your family parents. You may feel that an expense like a Health insurance premium would pull your savings down, but you're mistaken. In case of a sudden accident, a visit to the hospital is bound to cost you an enormous amount.
You may have health insurance through your office; never hesitate to take a few insurance policies on your family, including ageing parents. The prevention you would realize is better than cure.
Saving for Different Purposes:
You may be a salaried person and well equipped to meet all your expenses, resulting in savings. Savings generally protect you with financial health once you retire or slip into old age. But wait! There are other purposes apart from that. You may desire to go on a vacation or perhaps buy a farmhouse etc. This cannot be met with your available savings but create a special fund to meet those planned schedules in the future.
It is best to deposit these extra savings in an account with a high yield so that money value is not eroded due to inflation. Even a deposit for a short time in deposit schemes like ' CD' (certificate of deposit) is a good idea.
Be a Knowledgeable Taxpayer:
If you are a salaried person, you ought to know the tax bracket you would fit into. Tax is deducted at source when you work in a reputable organization and your ' Take- home ' is lesser to that extent.
There are many sites on the internet which has tax calculators. All you have to do is punch in your salary, and the tax calculator would let you know your net salary.
Debit cards Vs Credit Cards:
Debit cards are helpful as you need not carry the money in your bank account. You can only spend within that limit or balance in the secure account.
Credit cards allow you to buy anything or spend money that is not yours. If you can meet that commitment without rolling it over, your savings will not be affected. If you cannot pay that, it will attract a very high rate of interest which will erode your savings. Moreover, if you do not meet the bare minimum charge notified to you by the bank, it would attract late/delayed fees. The tip is to spend when you can meet it within the deadline.
Conclusion:
Financial awareness wins the day and not how high you earn. Tax structures keep changing every year, and money value keep depreciating year after year. It's best practice to know which account to open in the bank or elsewhere to mitigate inflation. If you follow this entire personal finance tip for beginners you will continue to live comfortably after retirement.
