I’m sure many of you can agree that money is a loaded topic. A conversation about it can easily derail into a heated argument. Perhaps that’s why many of us grow up feeling like we don’t know the first thing about how to handle our finances.
We’re here to try and change that—starting with the basics! Here are three things about money that everyone should know about.
1. Build Your Savings
No matter how much you earn, it’s important to set aside some money for yourself. Even if you don’t have a lot to spare, having an emergency fund should be a priority.
Saving 20% of your income is a good place to start, but you can choose a different amount depending on your personal situation. It can be 25% or even just 10%—the important thing is that you actually do it.
A financial cushion doesn’t just prepare you for unexpected events that life may throw your way. It also eliminates a lot of everyday stress. Having even just a little bit of savings can take you from constantly worrying about getting through the month to being able to plan for a better future.
2. Have Good Financial Goals
Speaking of the future, we all need goals to work towards. Of course, the same is true when it comes to money. Having goals to set your sights on will help you make good financial decisions.
Let’s say you want to buy a house in the next 5 to 10 years. To achieve that, how much should you budget towards making a down payment? What should your finances look like by that time? How much mortgage can you afford?
Instead of just spending your hard-earned money on a whim, financial goals help you put it to good use.
3. Understand When to Use Debt
These days, a lot of the talk surrounding debt is how to get out of it. But that doesn’t mean you should stay away from any form of debt at all costs. Depending on what it’s going to be used for, taking on a loan could be the right move.
Going back to the example of buying a house, few people can afford to purchase a home in cold hard cash. In this case, taking on a mortgage makes sense as long as your finances can justify the expense. Compare that to using your credit card frivolously. Not paying off the balance racks up unnecessary debt through high interest rates.
At the end of the day, debt is just a tool. You need to understand when to use it and when to avoid it.
Your money should be working for you, not the other way around. Let Spectrum Financial Group help you learn more about how you can use your resources to build the future that you’ve always dreamed of. We’ll help you make the most of your money so you can live your life to the fullest.