Dr. Richard Stephens
Are there any basic rules that will keep you financially healthy?
Here are ten guidelines, follow them and they will give you a head start on the road to financial health.
- Work out a budget and stick to it: This means spending less than you earn. A budget is a detailed record of your total income and expenditure forecasted. Many people may say, “I don’t know where my money has gone.” This will not happen if you budget correctly; your purse may still be empty, but at least you will know exactly where the money went. Budgeting is a chore for everyone, but no matter how boring you find it, it is an essential first step in managing your finances.
- Get organized: Create a file for financial matters and keep your accounts in order.
- Always save an amount of your income: Make savings a priority; small amounts will build up over time, into substantial sums. Build an emergency fund in case of an unexpected crisis.
- Have financial goals: having something to save for, i.e. a holiday, a car or your own home, will encourage you to persevere with your budget when the going gets tough.
- Pay off debts as quickly as possible: Interest rates charged on loans and credit cards can add up very quickly. Always pay the debt incurring the highest interest first.
- Avoid impulsive spending: Never buy things that you don’t really need. Before buying an item, ask yourself these two questions: Do I really need it? Can I really afford it?
- Be careful with credit cards: Credit cards can be a recipe for disaster, tempting you to buy things you cannot afford. Credit cards are not free, and its interest rates are high. Unless you are certain that you can pay your bill in full each month, the safest option is to do some ‘plastic surgery’ and cut up your credit card/s that may help to preserve your financial health.
- Never sign a contract or agreement unless you have read it thoroughly and completely understand its terms and conditions.
- Avoid activities or substances that may become addictive, i.e. gambling, drugs, alcohol or cigarettes. These can very easily lead to financial ruins, not only for you but also for your family.
- Put your money to work. It’s not optimized in just a regular savings account, earning a nominal amount of interest. Shop around for the investment that best suits your needs; into account such things as fees, interest rates and accessibility. Speak with a financial consultant that will be able to enlighten you on the best investment options.
