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12:11 am - Monday September 26, 2016

Learning How to Save Money is Part of Healthy Personal Financial Management

| Money Saving Tips | Rating: 4.5
by Numan

Those of us who have learned how to manage personal finances properly from a young age will probably be startled to find that many people are ignorant of how to save money (or any important matters of personal finance for that matter.) If your family, friends and other social acquaintances are not capable of personal financial management, then it would not be surprising if you are ignorant too. But you need not stay ignorant all your life – you can always change your future.

Some people may get started on the path of learning personal finance because they may have encountered problems in the past, or know someone who got into serious financial trouble because they were ignorant of personal finance money management. Even a firm grasp of the basics will allow you to dodge any problems falling into your path. Once you have the basics mastered, you can move on to more advanced personal finance concepts and methods.

To save money, you may need to find a job first (unless you have a lot of inherited wealth.) Most people know that they need an income source but may not have a clear idea of their value as employees so they may wind up becoming underpaid employees. So do your research, and find out how much you are worth in your occupation and industry first. This allows you to have a clear idea of how much you can afford to spend per month.

Next, every personal finance expert knows that you should divert at least 10% of your personal income into your savings account per payment received. Note this does not mean just 10% monthly – you have to pay yourself 10% to 20% from every income payment you receive. So if you are a freelancer, that means getting up to 20% of your payment per project to divert into your bank account. The end result should be that you come up with an emergency fund which can cover up to six months of your estimated living expenses. At the same time, you should stop accumulating debts like credit card debts (or at least reduce these to manageable levels.)

Lastly, you should learn to differentiate between low-yield savings accounts which have a lower interest rate, from the high-yield savings accounts which provide a higher interest rate for you. The lower the interest rate, the less you earn from your funds.

The concepts detailed here may seem rather simple but you maybe surprised by how hard some people find it to put concepts into realistic implementation. So you need to evaluate any financial risks you are facing first before you examine investment opportunities. Debt is a financial risk so try your best to wipe out debt. And when you have serious or significant financial decisions to make, always ask the advice of a professional personal finance adviser to be able to explore your options better. The more heads that deliberate about a personal finance problem, the more options you can come up with.

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