Source: 2019 Equifax Financial Literacy Survey
Financial literacy is vital when making healthy financial choices that will benefit you in the future. According to 2019 Equifax Financial Literacy Survey, 48 percent of the Americans learned to handle their finances from their parents while 14 percent learned from school. Knowing is one thing but being financially fit is another thing. Financial fitness is about making a well-thought decision about your finances.
Just like physical fitness, you need to have a regimen. A person can’t stay physically fit without exercise and diet. So how do you get your finances back in shape? Here are four tips to achieve your financial goals:
-
Have A Rainy-Day Fund
- Many unforeseen events can happen. Even if you are currently earning good who knows what will happen in the future. You could lose your job, get sick or business gets bankrupt. It is better to have a financial back up to survive. Where will you get the money? You could follow the 50/20/30 rule to break down your income. Fifty percent (50%) for essential needs, twenty (20%) for savings and the remaining thirty (30%) for flexible spending. The twenty (20%) for savings can be your rainy-day fund.
-
Trim Down Your Debts
- Pay your debt as soon as possible. The more you prolong it the higher the interest you need to pay. You must repay the existing debt first before getting a new one. Don’t take a loan one after another. You don’t want to spend your entire lifetime paying the debt. Yes, you will be short with money once you paid the loan but it will benefit you in the long run.
-
Track Where Your Money Goes
- Try to minimize impulsive credit card purchases when you are in a spur-of-the-moment. You need to have self-control and know the difference between needs and Think of how much you have and how much you can spare for buying your wants after considering your needs. Assess your priorities and live within your means.
- When you have extra money and you’re thinking of using it. Think twice. Instead of using your extra money in buying a new car or staying updated with gadgets, you could use it making investments. Buy a good investment and diversify your portfolio to earn a passive income. Know when to spend and when you can save.
-
Invest in Yourself
- Think about your future. It’s never too early to plan for your retirement. There is no assurance that you are always earning. Even though you are living in a healthy lifestyle, you can still get sick. Life is unpredictable. Get a health, life or homeowners’ insurance or anything suitable for you. You can live a lavish life now and suffer in the future or a simple life for now and lavish life in the future.
Make your financial fitness a priority. This is not just about saving. It’s a balance between enjoying life and saving. If you need assistance guidance for your business’ financial fitness, contact us today at admin@fas-accountingsolutions.com or 832-437-0385.
