Since the 2008 recession, the world’s financial situation hasn’t seemed quite as steadfast as it once did. The cracks of our economic system have started to show and people are more worried about the security of their money than they used to be. This isn’t meant to be an attempt at scaremongering, of course. It’s a good thing, in a sense, that people are more concerned about the security of their personal finances. No matter the state of the global market, money shouldn’t be treated as something for buying luxuries; it’s necessary for securing the future of you and your family.
The point is that you have to think about more than today when it comes to your personal finances. Whether you’re struggling or not, financial periods are ever-changing. If you want to protect your future then you need to make smart decisions with your money that take into consideration the long-term rather than the short-term. You never know what the future might throw at you but if you’ve made steps to improve your financial situation today then your tomorrow should look much better. Here are some smart money-based suggestions to help get you through this strange financial period.
Necessary and luxury expenditures.
It’s easy to get carried away with the money we spend. A few restaurant meals and trips to the cinema can add up very quickly. Before you know it, those few luxuries you allow yourself every month have really added up and you’ve got nothing left for the things you actually need. That’s why it’s so important to monitor your expenditures. You need to start budgeting your personal finances every month with your earnings in mind. Write down a figure for your monthly income (estimate if you’re self-employed and the figure varies) and then make a list of all the necessary costs you face on a monthly basis. Petrol, food, utilities, and rent (or mortgage payments) are all costs that you need to add up.
Once you have a figure written down for the amount of money you need for those necessary expenditures, set aside that much of your monthly earnings to cover all the important things in life before you spend any of your money. The amount of your earnings which remains is your disposable income. This is the amount of money you can afford to spend on luxuries in life. The one thing you should know about money management is that it depends on monitoring your income and expenditures on a frequent basis so as to ensure you never live beyond your means. Think about these things today so that you won’t have to borrow money and worry about debt tomorrow.
Dealing with debt.
Continuing from the previous point, money management is the key to a strong financial future. And whilst debt is a thing that we all might have to face at some point in our lives, there are good and pay ways to handle it. If you’re putting off debt repayments then you need to rethink your expenditures. The best way to get rid of debt is put all other luxuries on hold until all your borrowed money has been paid off. That means all of your disposable income (anything that isn’t going towards rent, food, utilities, or other necessities) should be going towards paying off your debt.
If you’re still struggling to get yourself out of a tricky financial hole, however, then you might want to look into consolidating your debts. Look into a debt specialist who can help you with this; whilst it may increase your overall debt, it will reduce your monthly repayments and make it more manageable for you to improve your financial situation. That doesn’t mean you’ll have more disposable income to spare; it means you won’t have to worry about having too little money to cover the necessities in life.
Real estate investments.
Investments might seem risky but they’re the best way to spend your spare income in order to build your wealth for the future. Obviously, you should avoid dangerous investment opportunities. You could look into property development if you’re looking for a risk-free investment route. The thing about real estate is that it’s a sturdy business. Yes, the market fluctuates up and down but it never vanishes; people will always need homes. Investing in property is one of the safest and smartest ways to spend your money if you want to see a return on your investment.
You just need to take your time to get to understand the real estate industry. Don’t dive into buying the first property you see; get some advice from estate agents and other property developers in the game in order to know not only how to get a good deal but how to increase the value of a property so as to make a profit (you might need to put in some graft and work on your interior design skills). You should do some research into the latest property news in order to keep up to date on the market. When you spot the best opportunity to sell a property, go for it. Investing in real-estate can be a long game but it’s one that could definitely secure your future if you figure out the rules.
Cash vs. credit.
This conversation can quickly become exhausting. Should you rely on cash or credit for financial security? There are opposing schools of thought for both sides of the equation. In some ways, cash is king. As discussed earlier, debt is a growing problem that is affecting millions of households. Some of it is unavoidable; student loans must be paid off, as must loans for house or car payments if you were initially unable to afford them. Still, you shouldn’t borrow money if you’re going to struggle to make the payments necessary to pay it off in time. That’s what can lead to a low credit score and it’s why you shouldn’t always opt for the credit card.
Of course, credit isn’t evil. As mentioned before, you should definitely focus on paying off your debts before borrowing more money. But that doesn’t mean the concept of borrowing money is inherently flawed. Building up a credit score can be a good thing. Lenders are more likely to loan you money for big things in life (such as home or car purchases) if they can see that you’ve got a good credit score. It shows them that you’re trustworthy. So borrowing money can be sensible if you pay it back in time; it builds up good credit which could help you in the future if you need monetary help in a tough situation.
Insurance is your friend.
Obviously, you need to be smart about the things you insure in your life. If you don’t live in a country prone to major natural disasters then you most likely don’t need to fork out a chunk of your savings in order to have home coverage for such disasters. When it comes to financial security, it’s better to be safe than sorry. Pay a little bit of money every year to cover things such as your contents and your home so that you don’t have to pay a huge amount of money if some unexpected event arises in the future. Protecting your financial future is all about putting a safety net in place in order to avoid costs that you can’t afford. Whether it’s your medical health or your car, get coverage in order to avoid pain in the future.