Many a times you have to take out loans to finance any monetary need which cannot be addressed through your salary. However, even the best loans have some amount of interest on them and as a result you incur debt. You may take years to get out of this debt as you have to keep paying interest rate on your loan and thus pay more than what you have borrowed in the first place. In order to save money and get out of your debt, you need to practice proper personal finance habits. Here are some good personal finance habits that you should be aware of.
1. Track your monthly income and expenses. This makes sure that your spending is within your income.
2. You should be careful not to overspend on gifts. You should make your gifts as economical as possible.
3. You should take advantage of your employer’s flexible spending account. These accounts not only reduce tax liability for you but it also acts as a part savings plan.
4. You should pay attention to your mortgage interest rate even after you have bought a home. This is because if the interest rates drop drastically then you can refinance your mortgage and make your mortgage less costly and easier to pay off.
5. Put an end to impulse buying. One of the best ways in which you can help prevent impulse buying is to make a shopping list for yourself and carrying it when you go out for shopping so that you can stick to it.
6. Check your bills as soon as you get them. After checking your bills, you should make sure to pay them back as fast as possible.
7. You should do proper research before you purchase extended warranties.
8. You should ignore credit card convenience checks that come in the mail. These usually come with high fees which makes them extremely expensive for you.
9. You should save a part of your income for your retirement. You should try and save at least 10% from every paycheck that you get. You should remember that it is never too early or too late to start.
10. Keep the money available in your wallet to a minimum.This is a good, easy way to practice money management.
11. You should have an exit strategy when you are investing. If you don’t have this, it will be difficult for you to identify the correct time to cut your losses or take your profits off the table.
12. You should never assume that past performances guarantee future results.
13. You should take advantage of automatic paycheck deductions. This not only ensures that you pay yourself first; it is also an easy and effortless way to save for the future.
14. You should go through the fine print of all contracts, be it credit card, insurance, loans or any other financial transaction before you sign on the dotted line.
15. Plan your weekly dinner menus in advance and do the grocery shopping accordingly. This ensures that you can reduce your monthly food expenses to a great deal.
16. You should pull out your credit report once every year and check for any errors in credit card statements or reporting. You should immediately dispute any negative errors as when this is removed your credit score will rise.
17. It is important that you formulate a budget as if you fail to plan it pushes you towards your doom with finances.
18. You should faithfully follow the budget that you have created and not keep it lying in 5the house to gather dust.
Thus you can see how these small personal finance habits can culminate in creating a better financial future for you.