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6 Simple Rules of Personal Finance You Should Always Follow

Personal finance sounds easy. When you’ve got the money, all you think about is how to spend it wisely. Experts say you have to prioritize your needs and not wants. Others recommend allotting 10-25% of what you earn into savings. Some would advise against venturing in small businesses. While there are tons of guides on how you can manage your finances right, you still end up getting into debt and left unaware of where your money went.

To end the guessing game as to when your life would improve financially, you need to learn these rules and follow them as religiously as you can:

1. Your expenses should be lower than your income

This is probably the fundamental rule in all personal finance courses. The logic is simple. It would be best if you spendless than what you earn. If your monthly salary is Php25,000 after-tax, then your bills, food, transport, and all other expenditures should be at Php20,000 or even less. The Php5,000 difference can be used for emergencies and future opportunities that would improve your life.

If you think your salary is not enough to cover even the basics of all your spending, then it is time to look for other ways to earn.

2. Check your bills regularly

It is but reasonable to set aside a certain amount each month to pay for your monthly bills, including electricity, water, cable, internet, and other subscriptions. Sometimes, you get used to the amount that you don’t care anymore as to whether you can lower it down. Consider that there are colder and hotter months in a year. If you’ve been paying as much as Php6,000 in electricity in April and May, it doesn’t mean you need to cover the same amount in August or December. Take advantage of the seasons when you can switch off the air conditioner and maximize electric fans. On the other hand, the rainy season should also help reduce your water consumption. You can drench your house plants under the rain instead of watering them with clean potable water.

utility bills

Checking your bills regularly can also help you keep track of what needs to stay or what should be canceled immediately. There are also some offers you can grab like three months subscriptions at a lower cost. Being mindful of what you use and pay will lead you to reduce your expense and to eradicate those that are not much of use.

3. Keep everything simple

More is expensive. When you buy more than what you need for the week, you’ll end up having spoiled meat in your refrigerator. When you hoard more supplies in your cupboard, you’ll end up giving some away. When you keep on shopping for more clothes, you definitely won’t be able to wear half of those in a month.

More debts mean more interest charges. More investments involve more worries. More pets mean more money for maintenance.

Keep things simple and minimal. This way, you can focus on everything you have, prevent resources from getting wasted, and save more money for emergencies.

4. Plan your meals

It has been said many times before that dining out will let you spend 4x more than what you pay when you cook. Planning your meals every week will give you cut on unnecessary expenses on restaurants and food deliveries. Imagine how much you can save if you eliminate food delivery charges at home. Deliveries can range from Php50 to Php200, depending on your location. So, if you order food five days a week, your average spends on food delivery alone would be Php500 or more – an amount you can use to buy 1 kilo of chicken, 1 kilo of pork, and 1/2 kilo of beef from your favorite meat shop. Fancy how much you can save if you refrain from buying your meals the entire week.

meal plan

5. Improve your professional and personal relationships

Building a competent and reliable professional and personal relationship can help you in all aspects of life. People who surround you can provide the support you need each day. When. You have good people around; you can choose to engage in simple things at home instead of splurging out to divert stress and worries away.

Spend weekends with the girls cooking or doing some household stuff, which doesn’t require much money to spend. Boys can engage in sports or even set up a barbeque night. Time with good people can save you from draining your wallets on drinking sprees in bars or shopping or dining out.

6. Eliminate high-interest debts

Life is hard, and getting into high-interest debts can make it harder. When borrowing money, consider minimizing the damage by opting for low-interest rates. Take time to ask for loan details first before applying. It would help if you made sure there no more additional fees or hidden charges entailed with the loan. You should also understand the terms and conditions so that you don’t end up paying more than what you expect.

Borrowing money is a privilege, but it doesn’t mean you will take in whatever is offered to you.

Final thoughts:

There are hundreds of rules on personal finance you can read about. These six rules are just a few of the many recommendations from the internet. Following them or not is always up to your preferences. However, it always pays to give them a try. Start doing at least three and see if these can make some changes in your finances. Check what works with your financial situation. It is never too late to work on improving your life with the best financial decisions.

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