Not the Monster You Might Think Is Under the Bed

Not the Monster You Might Think Is Under the Bed

Personal finances are a complicated topic. Not the Monster You Might Think Is Under the Bed Some of us are great at keeping track of our money, while others aren’t as good. First of all, you’re not the only one who thinks “not as much.”

Second, you might think that people who are good at it are magical creatures who were born with the instinct to handle their money well. More likely, they had to work hard at first to get into a routine, and they still have to work hard to keep that routine. Some simple steps can help you get your finances in order and give you an idea of where you are or what you should do next.

How it works

Creating a simple financial calendar

There’s no need to make things hard. Google made a spreadsheet for personal budgeting that is a great way to start keeping track of your income and expenses so you can see where you stand.

Count your debts

You probably have more than one interest rate. It can be tempting to stick your head in the sand and not want to know how much extra you’re paying when you buy something on credit, but knowing will help you pay the high-interest areas first and save you money in the long run.

It’s a simple step you can take without having to change much about how you handle your money.

Keeping track of your wealth

We all need to know our net worth, not just the people on the Forbes Billionaires List. Your net worth is the value of all of your assets that can be turned into cash minus all of your debts (anything you owe like student loans, credit card debt, mortgages, etc.).

If this number is more than what you owe, you have more money than what you owe. If it’s negative, you owe more money than you have. This number should go up as you age, if possible.

All about making a budget

A budget is a plan for how to handle your money and keep track of your income, savings, spending, debt, and other financial details. It helps you make smart choices about your money, like spending it the way you want, being ready for any surprises, and, most importantly, keeping your money in line with your priorities and plans for the future. In other words, to get more money on their own.

A budget doesn’t have to be strict all the time. It should be easy to change if your situation changes, like if your income goes up or down.

Creating a personal budget

Putting together a personal budget doesn’t have to be hard. If you think you don’t need a budget because you live from paycheck to paycheck and don’t have enough money to budget, try it out.

You don’t make a budget so you can spend more money; you do it so you can see where the money you already have goes. There are likely to be some surprises that will make you want to change how you spend your money.

Use a budgeting app like Mint or YNAB if you live on your phone (You Need A Budget).

Read: 10 Best Credit Cards in India for Gasoline (2023)

50/20/30 Rule:

The 50/20/30 Rule is a way to decide how to spend your money. It’s fair and lets you spend money on your lifestyle without making you feel like you should save every dollar you have.

50% Needs: Things like rent, mortgage, car payments, groceries, gas, cell phone bills, and minimum payments on loans and credit cards.

30% Wants: This is how much money you spend on your lifestyle.

20% Savings: Save money in a separate account until you have enough for three months in case you lose your job or can’t work for some reason. After that, you can start investing your savings in mutual funds, IRAs, and the stock market. A stock advisor can help you grow your portfolio by giving you advice on which investments are best for you.

Getting the best credit score you can

Potential lenders can best tell if you will pay them back on time by looking at your credit score. Your score can be anywhere from 300 to 850, and it’s based on how well you’ve paid your bills, how much you owe, how long you’ve had credit, how much new credit you have, and how it all works together.

Each of these factors is given a different amount of weight, with most of the weight going to payment history and amounts owed. If you have a low credit score because of bad things that have happened to you, all is not lost. Even if you don’t do anything else but pay your bills on time and slowly pay down what you owe, your score will slowly go up.

But there are some things you can do to actively improve your score in a good way. A credit score of 700 or higher is considered good, and most credit applications you make will likely be approved.

Here are some ways to get your score over 700:
  • Each month, pay off your credit cards in full. Even if you have to move balances from one card to another so you can do this on just one card, it looks good to have paid off a credit card in full.
  • Ask someone you trust to put you on their credit card as an authorized user. This feature was made so that younger people could get credit cards when they normally wouldn’t be able to.
  • Still, it has the huge advantage of giving the authorized user the credit score of the main cardholder. Be careful, though, because this works both ways. If you’re an authorized user and the main cardholder’s credit score drops below yours, it will hurt you.
  • Try not to get too close to the amount of money you can borrow.
  • There are two kinds of checks on your credit report: hard checks and soft checks. You may have heard that asking about your credit score will hurt it. This is only true when the question is hard. Before you agree to a credit check, make sure it’s a hard inquiry.

Insurance – pay more so you don’t pay WAY more later

  • Homeowners’ or renters’ insurance.

This type of insurance is required for people who own their own homes. It’s a great way for renters to make sure they won’t be in a tough spot if something bad happens to their rental home. Both types of insurance usually cover damage to the outside of your home and loss or damage to the things inside. The levels of coverage range from giving you back the exact cash value you paid for them, less any depreciation, to giving you back what you paid, plus a cushion for inflation.

There are some exceptions to what kinds of damage are covered, but overall, these policies keep you from losing your home or belongings in extreme situations like a fire or hurricane.

  • Health insurance

Health insurance is expensive, but not nearly as expensive as paying for even minor injuries or medical procedures.

If you are younger than 26, you could ask your parents to keep you on their plan and pay them back for the extra cost. It will cost less than what you would pay on your own, and it will give you time to save up for your own plan.

If you can’t get insurance through your job, make sure to get quotes from different insurance companies so you can compare them and look at the plans available through the Health Insurance Marketplace of the Affordable Care Act.

  • Car insurance:

Most states require you to have car insurance, but the amount of coverage you need can vary from state to state. You need to know exactly what you and other drivers in your area need to do, so you know how much coverage you need.

Even if you are a good driver, there are thousands of other people on the road with you, and you have no way of knowing how alert, tired, or skilled they are. You need to protect yourself.

How to increase your chances of making more money

  • Side hustling – There are two main reasons why people are doing side jobs more and more. First, in the past few years, our ability to work all over the world and connect with small groups of people has grown by leaps and bounds. You might have always been great at making turtle portraits out of old wine corks, but you couldn’t sell more than two.

Now you can! Second, compared to the past, life is getting more and more expensive, and we need ways to make more money besides our 9-to-5 jobs. Need plus ease of access equals a boom in side jobs.

The cool thing about this is that you can make it look like anything and spend as much time on it as you want. You might choose something that you see as a real problem that you can solve, or you might decide that your side job should be a way to sell things you already love to make. Your options are endless.

You can easily sell your work on platforms like Etsy without having to make a website. If you need logos or websites made, Upwork is a great place to find freelancers who can do it for a price you can afford.

  • Negotiate your salary or rates.

This is a big one that isn’t used as much as it could be. It’s not unreasonable to ask for more money for the same job you already do. As you gain more experience, your skills become more valuable, and you have the power to negotiate, so use it!

Many of us fall into the trap of thinking that we are stuck in the annual process of getting a raise at our corporate jobs. If you know how to approach it, there is almost always room for negotiation here. You have nothing to lose by asking, and the worst thing that could happen is that nothing will change. Best case, you get more money!

Freelancers also often have trouble knowing what to do when their rates go up. Talking to clients about increasing what you originally agreed to can feel like asking for trouble, but it won’t be if you do it the right way.

  • Level up on your value

You can always ask for more money if you do things to make yourself more valuable, like getting more education. Depending on your field, this could mean an online degree, a master’s degree, a certification from a recognized organization, etc.

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