Financial Advice Everyone Should Know
Anybody can get their hands on money, but not everybody knows how to handle money properly — in fact, the majority of people don’t understand personal finance! Personal finance relies on a few basic budgets, which are devilishly easy to calculate.
Understand Short-Term Debt
Credit cards are a livesaver if used correctly, but only if the balances are paid off before the end of the payment period. High interest rates on credit cards rack up quickly if there is a positive balance at the period’s end, which is usually a month. Avoid accumulated interest and late fees by paying the entire balance off before the month’s end.
Save Up for an Emergency Fund
The dollar amount of an emergency fund is debated by financial professionals, but it’s a good idea to hold back at least one month’s worth of expenses. So, calculate the total of how much you spend in one calendar month — ideally a few weeks longer than one month — and save your extra money until you reach the goal. The emergency fund financially protects you against minor car troubles and other unexpected bills, two common culprits that encourage people to accumulate credit card balances and other short-term debt to stay afloat.
Eliminate Debt Strategically
We’d all love not to have debt, but the vast majority of people today are in at least three months’ salary in debt. Credit cards’, student loans’, and other payables’ cumulative interest are responsible for keeping people in debt for years longer than without cumulative interest. Many people don’t calculate for cumulative interest, though. Knock off debts with the lowest balances first, then focus on larger amounts. No interest can accumulate without principal, so once an account is brought to a null balance, no interest can come from it.
Personal finance is simple to understand as long as one is fully informed and educated of any debt or obligations. For example, many people don’t understand cumulative interest. Those who don’t understand should not get a credit card until they understand cumulative interest. Personal finance doesn’t take a genius, it only takes a reasonably informed and educated individual.
– Staff Writer