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There are 10 rules to personal finance that you won’t learn in school.

These are the 10 most important financial rules that everyone should follow in order to keep their finances in order. It saves time and energy not to have to learn from your mistakes.

By Cosmin ChildPublished 2 years ago 7 min read
There are 10 rules to personal finance that you won’t learn in school.
Photo by Kenny Eliason on Unsplash

You won’t learn these ten personal financial rules in school, so grab a pen and paper.

1. It’s time to buy your first home.

A down payment of up to 20% of the purchase price is recommended when looking to purchase a home. Private mortgage insurance will eat into your savings if you don’t have this.

To avoid having to wait until you have a 20% down payment, you can save money by making the additional payments now rather than later.

According to macroeconomic fundamentals, housing value has increased significantly over the past decade while wages have stagnated or even decreased.

This means that saving 20% of the home’s value isn’t feasible because the value will only rise in the long term. If you can, save money for at least five years if you can do so without risking your life.

Commodity prices will rise if it takes you longer to complete the task.

2. SAVE. Repeat this process over and over again.

In elementary school, you’re taught to save 10% of your earnings. A family of four can’t afford to retire on this amount of money. Unless you’ve got a fortune to your name. Most salaried workers should save between 25% and 40% of their income.

Even though 10 percent may not seem like much, it’s a great place to start building your savings muscle.

Spend less money than you need to. If you’d rather save your money than buy a cup of coffee in the morning, do so.

3. Having a reserve fund in case of an emergency

You may not have learned about emergency funds in school. Fortunately for you, we are here to help. Data shows that 40% of Americans are unable to pay an unexpected $400 bill.

Keeping an emergency fund is something that an alarming number of people fail to grasp. What would you do if you lost your job today?

You’ll need to budget how much money you’ll need to get by. Six months’ worth of spending should be saved as a general rule, but we recommend saving more if you can.

4. What You Need to Know About Budgeting

You don’t learn budgeting in school. You may be at a disadvantage if you don’t understand the fundamentals of budgeting while in school, especially if you live alone.

Failure to keep track of expenses and make a clear distinction between wants and needs can lead to numerous problems. Everyone’s hard-earned money should be able to be budgeted.

All of your bills must be paid, but you must still have money left over to buy food and put it away for the future. Budgeting is important, but no one likes keeping track of every dollar they spend.

Instead, you can make good use of tactical budgeting. Here, long-term planning and budgeting are essential. As an example, you could figure out how much money you need each month, and then create a six-month budget that covers all of your needs, as well as all of your wants.

As a result, you can divide the funds into various accounts to ensure that you don’t exceed your budget. You can make sure you’re on track by checking in on your list regularly.

5. Investments that earn interest over time

It is a well-kept secret in the financial world that compound interest has such sway. Everyone under the age of 30 has an advantage over their elders when it comes to having the luxury of time on their side.

When it comes to investing, they have an advantage over those who can achieve their financial goals faster.

Interest compounding is all they need to do. Investment of small amounts of money over time in a high-interest savings account yields enormous returns. Over time, the value of this investment will grow.

Here, the importance of compound interest is demonstrated. What would you rather have, $3,000 or a penny that doubles in value every two days?

Aren’t most people going to go with option 1?

Your second option would net you $10 million in 30 days, according to the math! To be honest, I don’t know what else could convince you to take advantage of this incredible opportunity to increase your wealth.

6. Controlling your credit card debt

Within a few weeks of receiving their first credit card, most young people have already maxed out their limit. As a result, they accumulate debt, incur exorbitant interest costs, and may find themselves in a precarious financial position if payments are not made on time.

Having a good credit rating and a long credit history is something that the majority of people have no idea about.

However, if schools focused more on teaching students this life skill, they might be able to figure it out...

As an adult, your credit score is critical to your financial well-being.

The ability to buy a house, a car, and other major life events are greatly facilitated by having a good credit score. In today’s world, credit is no longer a minor consideration.

Everyone needs to know how to get credit and maintain it.

Here are a few ideas.

Obtain a credit card as a starting point.

Credit cards are generally considered bad by the general public, but they can help you raise your credit score.

An example will suffice. Getting a credit card after high school was something that my friend Kevin, like many others, steadfastly refused to do. Exactly how important is this?

Credit records had not yet been established when the man began searching for an apartment or vehicle.

Credit card transactions, including interest payments, are recorded by banks when you apply for and use a card.

Based on your performance, your name will be assigned a numerical value. Depending on your credit, you may be able to borrow a certain amount of money and pay a certain interest rate when applying for a loan.

Two, make timely payments on your debts.

If you owe money today, pay it today. There is no other option.

7. Procedures for insurance claims

If you have a family member who relies on your income, you should get life insurance. A spouse, a child, or a parent could be the subject of this letter. Due to its flexibility, term insurance outperforms traditional life insurance in many ways.

If no one financially relies on you, you should consider canceling your insurance policy. In addition to life insurance, you should think about other types of insurance to protect your assets and your well-being. Include your car, house, valuables, and overall health.

Another option is to purchase a single policy of umbrella insurance, which covers multiple policies and is less expensive. Before deciding on an insurance provider, check out their rates and benefits.

8. Taxes are the third item on the list.

Due to the vastness of the subject, taxes are rarely broached in the classroom. To stay in the clear, you need to know how and when to use them.

Determine your tax rate before receiving your first paycheck or making any sales. You can use this to estimate how much money you’ll have left over after paying your taxes.

When determining whether or not a job offer meets your financial needs, or if you should price your products or services more aggressively, you can use this information. Fortunately, several online calculators can do the math on your behalf. They’ll show you everything from your gross salary to your tax bill, as well as your net income (after deductions).

You will have about $26,399 left over after taxes if your annual salary is $35,000 in Manhattan, New York.

Be aware of the tax rate that will be imposed on any raise you receive. If you go from $35,000 to $41,000 in annual income, you’ll gain $345 a month, rather than $500. You should continue to prepare your tax returns because there is a lot of incorrect information and bad advice available on the internet these days.

9. Ensure a healthy lifestyle

Even with insurance, a trip to the hospital to treat a broken knee could cost thousands of dollars. Visiting the emergency room because you’re unable to pay your monthly health insurance premiums?

To pay for medical expenses, you may have to take out a loan, putting the finances of others at risk.

Isn’t that unfair?

Don’t wait until it’s too late to get health insurance! In the long run, self-care can save you a significant amount of money. A healthy diet includes a balanced diet, regular exercise, and avoiding excessive alcohol and other additives, such as sugar and caffeine.

Take care of your health now to avoid being held accountable later!

10. The first thing to keep in mind is that student loans aren’t always necessary.

Contrary to popular belief, obtaining an associate’s or bachelor’s degree does not necessitate the use of student loans. Nearly two-thirds of recent college graduates are dissatisfied with the amount of money they have to spend each month on paying off their student loans.

It is not always necessary to take out student loans to further your educational goals. To prevent students from becoming financially burdened, some universities, such as Davidson College in Charlotte, offer financial aid. For a lot less money than private school tuition, there are a variety of other educational options.

Working part-time, going to a less expensive school, or starting at a community college can all help you save money. A debt-free education, on the other hand, is not something we advocate as a universal aspiration.

It may be worth it in some cases.

If you want to work in a lucrative field, you shouldn’t let a few thousand dollars stand in your way. However, don’t let student loan debt be the primary reason you’re still in school today.

Professional success can be achieved in a variety of ways.

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    CCWritten by Cosmin Child

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