Financial survival guide for beginners

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Life is naturally uncertain. We know not what will happen tomorrow. Today you might have a great job that pays all your bills and more but tomorrow it might not be there. For this reason, it is important that we always have a financial guide, helping us survive all odds. If you have never thought about planning your finances, it is about time you start. The following guide will help you in surviving major life financial crisis.

Personal Budget

A budget is very essential for financial survival and you cannot afford to do without it. It helps you keep your spending in check. This is in line with your earnings. Having a budget prevents you from impulse buying and spending money that you do not have. The first step to achieving financial success is through planning your budget. The budget should clearly state your monthly financial goals. The next step is maintaining self-discipline and following your budget to the letter.

When you are planning your budget, there are three major things that you need to put into consideration. First, you need to have an estimate of the amount that you are likely to earn every month. Secondly, you should also ensure that you plan your costs for the month. Lastly, you need to ensure that the amount you earn can cover the expenses for the month and still have some remaining money to bank as your savings.

A good budget should accurately project your earnings for the month. Additionally your budget needs to be as realistic as possible. Avoid underestimating your monthly costs. It might feel very difficult following a budget that does not include all your monthly costs. Also, it is important that you make your budget flexible. Remember that life is very uncertain and tomorrow you might be earning more or have more needs that need to be covered by your income.

 Consolidating Debts

Credit card advancements help a great deal when you are going through a financial shortage but still need to pay your bills. It is easy and very convenient for anyone. Therefore, very seductive. However, what many people do not actually know is that the interest rate charged on credit card debts is usually higher than that charged on loans.

Therefore, if you preferred this option before, it is time you thought twice. Consider the option of applying for a loan and repaying all the credit card bills at once. This will help you save a lot of money that would have been spent in covering credit card debts interest.

 Planning for the Future

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Many people underestimate the benefits of saving for the future. At the time, making a contribution every month towards your future might seem like an unnecessary endeavor. But, the truth is it will save you and your family a whole lot of stress once you have retired from your job.

Once you are out of your job due to factors like age or health issues, you do not want to be a burden to your family members. Therefore, it is advisable that you start saving as early as possible. When you start saving money for your future, there are various factors that you need to consider.

First, always take advantage of the retirement benefit package offered by employers. Most employers will encourage you to save for your retirement by offering to contribute some money and add to your total future savings. Secondly, ensure that the amount you pay towards your future savings is not constraining on your budget and short-term financial goals.

 Debt Repayment

Loans are a great way of financing your short term needs. Also, they in some way help you in saving money. Especially, if the loan is taken for the purposes of investing. However, you need to be very wise when borrowing money. The same applies to when you are paying back money owed. If you currently have a loan, do whatever you can to repay it in the shortest time possible. Repaying debts in a prolonged period of time does seem convenient and easier, sure. But, in the long run you find that it eats a lot into your savings. In some cases, you might not even be able to ever be out of debt.

By paying your debt in a shorter period of time than allowed, you will be saving a lot of money that would have been spent on interest rates. Also, it will help you get peace of mind, knowing that no one is after you for their money. This financial tip also ensures that you maintain a great credit history.

With a good credit history, it will be much easier for you to access loans from banks and other financial institutions in the future. Also, if you maintain a good credit score, you won’t have to worry about paying overly high deposits and interests whenever you get someone to advance money to you.

 Insurance

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Most people find insurance to be an unnecessarily cost and hence will avoid it at all cost. But, truth be told, no one really knows about the future. Insurance gives you a means to reduce the impact of risks if they ever materialize. Insurance is a great way to invest in oneself.

I know the costs might seem high and you may feel that maybe somethings that you need to get insured for might never affect you. But, imagine a situation where they ever happen. Will you not be happy knowing that someone else has got you covered there?

Insurance will help you bounce back to your financial status in no time. Also, it will lift off the stress of having to look for money when risks or losses occur. Start playing safe and insure all that you hold as valuable to you, today.

 Get a Savings Account

While saving might be easy, remaining disciplined to sparing your savings money might not be that easy. Therefore, after you have planned your monthly savings at the budget planning stage, it is important that you open a savings account with the bank of your choice. The benefit of this is that it will restrict your access to savings, thus enabling you remain disciplined to saving.

When opening a savings account, I would advise that you consider the various interest rates offered. Go with a bank that offers higher interest rate. This way your money will multiply faster. Also, go with a reputable bank. You do not want to lose your money when your savings bank is closed due to financial issues or other scandals. Therefore, always conduct a thorough investigation about your bank before you can open a savings account with them.

 Maintaining a Good Credit History

A good credit history will assure lenders that you are not monkey business and that they can trust you with their money. Hence, the need to maintain a clean credit score. To maintain a good credit score, you need to always check how you have been rated each year, in regards to paying your bills and debts.

Do not just assume that just because you pay your loan installments, that you have a clean pass to a healthy credit score. The only way you can ascertain this is by checking your credit report every year. Human is to error, and in some cases you might find that a poo report has mistakenly been written about your credit.

This will incur you some hefty costs that not be easy to recover. It might make it very difficult for you to access loans offered at low interests. Also, it may hike your credit card bills. Therefore, to be certain, just check your annual credit report. Besides, it only takes a few minutes of your time and might save you a hell lot.

 Emergency Fund

Dealing with emergencies can be very costly. Therefore, this calls the need for an emergency fund. An emergency fund works just like insurance. Your emergency fund will be able to cover for your emergency needs when they arise without touching money from your savings.

When you are hit by an emergency and you happen to have an emergency fund, you will not have to worry about taking a loan or tapping into your credit or debit card to assist you financially. For this reason, you will be able to avoid cost of interest rates. In the end, by having an emergency fund, you will be a step ahead towards achieving financial security.

 Invest

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If you are currently employed, plan on saving money to start your own investment. Do not be afraid of failure. It is through taking risks that you will truly know your potential. Once you think you have saved enough, do not just let your money lay idle in the banks as it makes other people richer. Be creative, think of some way in which you could multiply your money.

When making an investment, do not be afraid to start small. You need not even take a loan to fund your investment. If you have a brilliant idea, there will always be an investor out there looking to chip in. therefore, inadequacy of capital should not be an excuse.

With an investment, you will have more means of generating money. Meaning, there will be less strain in covering your monthly expenditure. In addition, there will be more money available for savings. Also, it will give you security if you ever get laid off of your job.

 

 Conclusion

The journey to securing a stable financial future may not be easy. You might feel like you are straining too much to live up to it. But, always motivate yourself with the fact that the future will be much easier with this financial survival guide.

Another way you can motivate yourself is by getting a partner or friend with whom you can follow this guideline with. Knowing that someone is going the same thing as you are will encourage you to keep moving. Lastly, I would advise that you reward yourself once in a while. Check if you have achieved some of your financial goals, and if so, reward yourself for the hard work. I promise you, it will make this financial survival initiative interesting.

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