Everything in the world we live in tends to evolve with time. But do we need to change our financial planning to keep up with changing economies and technology? As far as money is concerned, there are some rules of thumb. These are the classic rules that we shouldn’t break. They aren’t written in stone but are vital in managing our finances. We don’t have to follow them religiously, yet we shouldn’t stray far away from them, especially if we’re looking to a bridging loan comparison site to help ourselves out of a tight spot. Here are those financial rules.
Using Credit Cards for Emergencies
We can’t talk about money matters without mentioning credit cards. These cards are vital in tracking our expenditures, increasing our cash security, shopping convenience, and helping us get credit. With that said, incurring many credit card debts is the worst financial mistake.
We don’t have to swipe those plastic cards on everything we desire. A good subrule I use is, “if it isn’t a basic need, it doesn’t deserve my card.” I only use this card for shopping necessities, especially when faced with emergencies. I also avoid interest charges by paying my credit balances in full every month.
Always Read the Fine Print
Financial contracts are things we encounter daily. Contracts manage most of our transactions, whether bill of sale, lease, credit card slips, or rental agreements. Once we affix our signatures on the dotted line, we agree to all the stipulated terms. It becomes legally binding, and we cannot claim to act on ignorance when breached.
Given the legal implications of fine prints, we must bring along our magnifying glasses when reading them. Never sign them before thoroughly scrutinising their content. I once made the mistake of rushing to sign a rental lease. Later on, I discovered some hidden fees mentioned. When I called to enquire, the lessor clarified it’s their standard contract and can’t be changed. From experience, I re-read every contract before signing.
20% Home Down Payment
Nearly all lenders require a down payment before preapproving home mortgages. Financial experts often advise us to put down at least 20% as a down payment. In reality, 20% isn’t law, and we can pay lower percentages. However, low mortgage down payments come with a costly demerit, and we will be required to pay more interest at a higher rate.
The high interests add to our monthly payments, mainly if we include other financial obligations. The better trade-off is saving for a down payment until it reaches the 20% mark. At that percentage, we will pay lower monthly payments, have a smaller loan, and won’t need mortgage insurance.
Let’s also not forget that you may be tempted to splash out on gifts or holidays throughout the year. Especially with Christmas, you might not have your eye on how much you spend. At this time of year, though, saving for a down payment can seem like an impossible balancing act, but that doesn’t mean you can’t save for your all-important first home during the holidays.
10% Saving on Income
Although outdated, the 10% saving for retirement still plays a significant role in our financial journeys. When I got my first vocation, I was eager to commence saving for retirement. Being young, I opted for a 401(k) and set aside 10% of my income. It was a simple, easy way for a teen to save for retirement. The standard is 10%; it can’t be lower, but it can be higher.
As I approached 30 years old and got a better job, I increased my savings. Statistics show that our life expectancy is rising while our retirement age is fixed. After all, the 10% saving might not be enough to cover our lives after retirement. We can avoid post-retirement predicaments by increasing our savings rate and cutting expenses.
Social Security Number Kept Safe
Financial crimes have been on the rise, particularly in this digital age. Identity theft and carding are now the norms in the Internet’s darkest corners. Such thieves only require our social security numbers, credit card numbers, and names to execute their crimes. They might make credit purchases or, worse, claim a loan under our names.
In today’s digital age, security and your phone are especially essential in a world where sensitive information, like social security numbers, is at our fingertips. While phones were once exempt from cybercrime, this is no longer true. There are multiple threats to consider, and not doing so can have dire consequences. If you click here, you will discover the risks and safety measures you can take to protect yourself. You can then use your phone with peace of mind about protecting your security.
Finances tend to be personal, and the above rules are in no way a fit-it-all solution to our problems and serve as a guide for regulating our financial habits.