Hi friends! Today I have a quick guest post for you from Sarah Smith, who is taking us back to the importance of the basics of financial responsibility. Sarah has been a personal finance author for the last five years. She is also an independent and very passionate finance and investment advisor. She regularly posts at www.personalincome.org. Enjoy!
You will find so many articles and definitions on being financially responsible but do you really understand those? If you don’t than here I am to explain you in the most natural way possible that what is financial responsibility.
To be financially responsible means to live within your means, to spend less than you earn and to stay out of debts. Click here to see what investments are right for you.
There are few basics to financial responsibilities I need you to have a full grip on and here are those.
Budgeting
Budgeting is very important, I repeat, very important. You may have been told to work on a budget several times, but I cannot help myself but tell you this one more time ‘work on your budget.’
Planning out your finances may be hectic, but it’s worth the trouble. You just have to know your income’s inflow and outflow. For your own ease, use an app like MINT to spare yourself some trouble.
Avoid Plastic Money
Plastic money, that is, credit and debit cards, are a common thing now and almost every one of us are using it. But with this ease, we often forget what trouble this thing brings. Credits cards have the tendency to make one spend more than they have in their account in the name of their next paycheck. But things may go out of your hand if you would not be very careful.
If you have to have plastic money as a source, try a debit card instead of credit.
Pay First
After buying something, the first thing that you have to do is pay. We often question why we have spent more than we have earned and the answer we hear is because of not paying that very instant. We rely so much on the next income that we pay almost to attention to a secure future.
Emergency Fund
Most of you may not like the idea, or you cannot just save, it is not who you are. I understand, it was me once, but I have paid my price and did not want anyone else to go through the pain.
Try to save up a little from the beginning to gather up a big amount for afterward. Keep that money at a safe distance but keep it at a distance so that you do not end up ordering pizza in the middle of the night in the name of emergency.