When you’re young and (relatively) carefree learning about good money management can feel like something you can do later rather than immediately. While this might be the case, there’s no time like the present to start getting a handle on your finances, particularly with the economy remaining unstable. Here are a few tips to help you make the most of what you have:
When you receive your first few pay checks it can be tempting to use your credit card and splash out on all sorts of treats. While there’s no harm in treating yourself for your hard work, it’s important to think to the future too, rather than just living for the moment. So it’s a good idea to split your income in to three separate groups – essential outgoings, non-essential outgoings and savings.
Firstly, work out how much you definitely need to spend each month on things such as rent, bills and food. From there you’ll be left with a sum to use on everything else, such as entertainment and other treats. If you’re stuck, why not follow an online guide to budget planning?
Save for emergencies and retirement
Once you’ve been realistic about your spending, consider transferring a percentage of your income to a savings fund. Not only will this prove useful if you fancy taking a holiday or making a big ticket purchase, it’ll also cover you for emergencies. It’s also, regardless of your age, worth thinking about your retirement. Find out if your employer offers a pension plan as these can often have a number of benefits attached to them.
Use credit cards wisely
When used irresponsibly credit cards can cause problems and lead to a debt spiral that the user is left paying off for years to come. However, for all those who find themselves in trouble there are many more who find their little bit of plastic extremely useful. The key is only using it to purchase what you can realistically afford to pay within a reasonable time-frame, as this will help to minimize the impact of interest rates.
If you are a retiree, you may be experiencing an increase in your financial burden. But, whether you want money for household expenses or recreational purposes during retirement, a reverse mortgage can offer you a solution. You must be 62 to get one, and you must live in your home permanently. If you meet those and other basic requirements, a reverse mortgage calculator will be used to figure out how much home equity you can borrow.
When you borrow the money, it will be under a long-term agreement that will exist until you leave the home. Then the balance will be due. That is in contrast to a standard loan, which you would have to pay back in steady installments much sooner. That is why a reverse loan offers more financial freedom when you retire.
It’s also a good idea to compare credit cards to find the right product for you and always make sure you make repayments on time and whenever possible clear your balance in full each month. If nothing else, using your credit card in the right manner will boost your credit score.