Learning how to take control of your financial health can feel like a truly overwhelming task. How you manage your money is deeply personal, and there’s often stigma attached to asking for help. Arbitrary rules like “save at least 10% of your income each month” or “don’t buy a home that is more than two and a half years’ worth of salary” can feel outdated and stifling. Luckily, there are ways to improve your personal finance that suit you. Let’s take a look.
You’ve probably heard of the 50-30-20 rule, popularised by Senator Elizabeth Warren. The basic principle is to divvy up your after-tax income and allocate it as follows: 50% on your needs, 30% on your wants, and 20% on savings. While this works for some, it doesn’t allow for very much wiggle-room.
Building your own budget around your personal financial needs is simple and probably more sustainable in the long term. Savings are important, but having the freedom to enjoy your finances is equally vital. Use a budget calculator to customize a plan that actually works for you.Photo by Bich Tran : Pexels
Make Calculated Long-Term Investments
A long-term investment is an investment that you plan to keep for more than a year. That doesn’t sound very long, but it adds up over time. While short-term traders can be very lucrative in the moment, they don’t provide the chance for gains that long-term investments do.
The best example of long-term investment is buying a property. While that may seem daunting, there are ample opportunities for first-time buyers these days. UK residents can now benefit from the 5% mortgage scheme sponsored by the government. This, combined with a mortgage broker like Trussle, can help you find the best rate possible. Sites like this offer a calculator that allows you to enter your data and find the most appropriate mortgages.
Benefit from Compound Interest
Albert Einstein once called compound interest the “eighth wonder of the world.” While it’s never too late to start saving, it is the most successful over a long period of time. The longer you invest funds for, the greater the value of your investment, and the more you’ll earn.
Why’s it important to start investing early? To take advantage of compound interest. In theory, you’ll be earning based both on your initial (and ongoing) investment and the interest that you earn. The earlier you start investing, the more you’ll benefit from it. If you start in your 20s and invest consistently, you could be set up by retirement age.
Take Control of Your Personal Finances
It’s never too early to take control of your financial health. There are simple and intuitive ways to improve your financial health, with early investments and personalized budgeting at the core of the matter. Managing your money can feel like a totally overwhelming process, particularly at a young age, but doing so can be empowering.
Make financial decisions that will allow you to enjoy your life as you’re living it. A plan that’s too restrictive is unsustainable and will be difficult to follow in the long run. You’ve got this!
Featured Photo by Lukas : Pexels