Principles to Help you Manage Finances
1. Money Awareness:
Ensuring a stable financial situation starts with understanding your spending habits, your creditworthiness and where you stand with regard to your budget and disposable income. Are you good at saving or are you a big spender? Understanding your financial position will help you to plan realistically for both long and short-term goals.
2. Money Plan:
Your financial health and secure financial future lies in your ability to budget properly. Draw up a budget that includes not only your monthly expenses, but future planning for retirement and education too. If you are a habitual spender, arrange debit orders each month that pay your most important bills before you can spend frivolously on anything else.
3. Money Safety Net:
Saving money is one of the most important things that you can do to ensure financial security. If you have savings, you won’t need to seek credit or a personal loan to cover any financial emergencies that may arise. You need to allocate money in your budget towards savings and investments every month. To help you start saving, ask yourself the following questions:
- What is my investment goal? Is it for a safety net, retirement or a big event such as a wedding?
- Do I want certainty that I’ll get my capital back, or can I take a chance to gain higher returns?
- How long do I want my investment term to be?
Once you know your savings goals, it is time to find the right investment account to fit your needs. If you want quick access to your money in the case of an emergency, you will do well with a Notice Deposit account. Although these types of accounts generally offer lower interest rates, you will be able to make additional deposits into the account at any time, and withdraw funds on a specified notice period.
A Fixed Deposit account is a better option when you are saving towards a long-term goal. With this account, you will deposit money and will then only be able to access it after a fixed term. This is a riskier type of account as you will not be able to access the money sooner than the specified term date, but you will also earn higher interest as a result.
Think carefully about your goals before you find the right investment account.
4. Money as Good Credit:
You should only take out loans when your reason for needing credit will help your financial future – loans for a house, a car or study purposes, for example. Avoid using credit to purchase things that are temporary and will have no positive influence on your future.
Irrespective of the credit that you choose, ensure that you are able to pay the loan off as quickly as possible without falling into financial disrepair.
5. Money Control:
You need to take control of your money, before it controls you. Check your credit profile regularly to ensure that you are in the clear, and never default on payments. If you are in a sticky situation where you are unable to pay any of your accounts, ensure that you speak to your credit provider to make alternate payment arrangements to prevent a negative credit listing.