With just a few simple steps, you can start making a significant difference to your personal finance and be well on your way to true financial freedom.
More Simple Rules for Personal Finance
In our last article, we talked about how important it is to manage our personal finances and how simple changes can make a huge impact on them.
Today, we bring you more simple rules for personal finance that we didn’t include in the first article that will certainly make a difference with how you manage your money and how you’ll be able to set it up in the future.
Why don’t we jump right in, shall we?
Learn How Much Money You Really Earn Per Hour
Figure out your net earnings after subtracting taxes, costs of commuting, professional clothes, work-related meals, and other out-of-pocket expenses.
Then figure out how many hours of work you do including business meetings and travel times in your commute.
Then divide your total income by this number of hours to get your true hourly wage.
Use That Hourly Rate Versus Everything You Buy
Knowing your true hourly wage can be a very incredible number because it allows you to see the value of the things you buy in terms of the amount of work you put in.
If your true wage is around let’s say $10 an hour and the item that you need to buy is around $20 an hour, ask yourself, is it worth the two hours of your work for this item?
Only you can assess whether or not its value matches or not.
Same thing with a $1,000 item like a TV.
Is it really worth the 100 hours of your work when you can get something smaller?
It almost always lets you validate whether your spending is right not.
Ignore Professional Stock Pickers
Financial media, whether it be in magazines, newspapers, or on TV like to get experts on the stock market who talk about the latest or hottest stocks available.
I suggest you ignore all of it. Often these people represent companies who have huge conflicts of interest.
These so-called experts often are not knowledgeable enough to know the ins and outs of certain companies, industries, and stocks due to more often than not being too complex to summarize into simple financial advice.
Ignore Professional Economic Forecasts, too
This is the same thing. Financial experts cannot accurately predict what direction the economy will take.
While they may be able to provide some good advice, in general, you don’t really need it.
You may end up being manipulated into investing or putting your money into companies when it’s really not necessary or a good financial choice.
Set Big Goals for Your Personal Finance and Stick to Them
Having goals is very important when it comes to deciding on your personal finance.
It’s one of the first steps you need to make when creating a financial plan. List down the goals that you want to achieve and break them down into steps that you need to make to achieve those goals.
Regularly remind yourself of them and come back to them from time to time.
This should remind you always what your goals are and align your income and your spending towards your goals.
These constant reminders will motivate you to keep on track until you reach your goals.
Rent Until It’s Cheaper to Pay Monthly for Home Ownership
Often in the pursuit of financial freedom and the American dream, we may delude ourselves into thinking that we should try to get a house right away.
However, one should consider how much your monthly fees will be if you do end up buying a home.
Is it more or less than what you are willing to pay every month?
When your monthly mortgage payments are potentially going to be equal to or less than what you are paying for in rent, then you should consider buying.
However, if the monthly payments would come out as larger, then consider if you can actually afford the increased monthly payments compared to your current rent.
Be Smart on Car Purchases and Base It on Reliability and Fuel Efficiency
When buying a new car, make sure to base your decisions on reliability and fuel efficiency.
This is because it can make a huge difference in your expenses in the long run.
The more reliable your car is, the less likely you have to spend on bringing your car to a mechanic.
Fuel efficiency is also an important factor. It’s always a question of how far can you get with a gallon of gasoline.
The more miles that you can get the better because that means you can travel longer distances with much less fuel compared to a gas-guzzling vehicle.
Those expenses add up and can hit your personal finance negatively.
Drive to the Maximum Speed Limit
Another tip with your personal finance with cars is driving up to the speed limit.
The reason is that many cars become more efficient as it hits certain speed limits.
While driving slowly could actually expend more fuel than necessary.
This means that you can actually save a few dollars each time which can add up over the course of a year.
Air Seal Your Home
Another tip on helping your personal finance is air sealing the home.
One of the largest expenses that many homeowners have is heating during winter.
During winter, many homes leak warm air with cold air leaking in.
This means your heating has to run even more which expends more fuel.
In summer, it’s the other way around and will cause your airconditioning to expend more energy.
The best way to address this is to air seal the areas in your home where air leaks and before you know it, you’ll be saving hundreds or even thousands of dollars in heating fuel and electricity.
Building Relationships With Your Neighbors
Neighbors can be an extremely useful resource. In most cases, they have access to many things you may need in your home.
These small things can add up.
Perhaps they also have access to certain tips and tricks in the neighborhood that can save you some money, or maybe they can even connect you to discounted services that you may not be even aware existed.
Either way, make sure to spend time and build meaningful relationships with your neighbors and it could benefit your personal finance in the long run.
Your personal finances are something you should always try to keep a track of.
It can seem overwhelming to think of how to manage them.
However, with just a few simple steps, you can start making a significant difference to your personal finance and be well on your way to true financial freedom.
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