Five Personal Finance Rules You Should Be Following – Money Perception

Managing money properly is one of the most common things that people struggle with on a day-to-day basis. Though it can be difficult to carefully track your finances, failure to do so can have a significant negative impact on your life, in some cases resulting in bankruptcy or an inability to ever create decent savings. When I was in college, I knew investing in real estate was in my near future. Before I purchased my first property to flip, I saved money by decreasing my expenses to the bare minimum, avoiding credit cards and starting a small side business marketing classic cars to generate income. This allowed me to start my education in real estate at a very early age.

As with most things, following some simple rules will give you at least a good start in managing your money. Here are five of the top rules for personal finance and money management.

1. Save Most Of What You Don’t Have To Spend 

Every month, you’ll have a certain amount of income and a certain level of expenses. Needless to say, the essential expenses — food, utilities, housing costs — have to be paid for. After you take care of these essentials, however, there’s a good chance that you’ll still have some money left over from your monthly income. Unless a very pressing need comes up, you should try to put at least half of this money, preferably more, into savings. Doing this will help you to quickly build up your savings account while at the same time still leaving you some of the leftover money to spend as you like.

2. Avoid Credit Card Debt 

In the modern world, taking on some debt over the course of your life is almost a certainty. All debt, however, is not created equal. Paying a mortgage builds equity in a home while guaranteeing that one day you will not have to pay anything monthly to live in your house. Paying down a car loan ensures that you have the necessary transportation to reliably get to and from your job, allowing you to earn a living. Credit card debt, however, is usually built up by spending money on nonessentials, luxuries and impulse purchases. This is why it is rarely a good idea to carry credit card debt.

There is, however, a more nuanced view of this issue. An important part of personal finance is having good credit, which usually involves using a credit card regularly. In order to balance the need to build your credit with keeping yourself free from credit card debt, try treating your credit card like a debit card. Use your card to buy everyday necessaries, being careful to spend only money you already have, then pay the balance off at the end of the month. This will help you to establish a credit rating that can be used to borrow money when you really need to while keeping you free from accumulating credit card debt.