Steps to Financial Health
there any basic rules that will keep me out of financial trouble?
following guidelines, if followed, will give you a head start on
the road to financial health.
- Work out a budget and stick to it ,
which means spending less than you earn. A budget is a detailed
record of your total income and expenditure. So many people say,
‘I don’t know where my money goes.’ This will not happen if you
budget correctly; your purse may still be empty, but at least
you will know exactly where the money went! Budgeting is a chore
for everyone, but no matter how boring you find it, it is an essential
first step in managing your finances.
- Get organised . Start a file
for financial matters and keep your accounts in order.
- Always save a regular amount of your
income – make that a priority. As the old saying goes,
‘Look after the pennies and the pounds will look after themselves.’
Small amounts will build up over time into substantial sums. Build
an emergency fund in case of the unexpected crisis, and a ‘fun’
fund – everyone needs an occasional splurge on a night out or
new outfit. If you are starting your working life, consider making
your own contributions to superannuation; if you are an older
worker, consider increasing your contribution.
- Have financial goals. Having
something to save for, e.g. a holiday, a car, your own home, will
inspire you to persevere with your budget when the going gets
- Pay off debts as quickly as possible.
Interest rates charged on loans can mount up very quickly.
Always pay the debt earning the highest interest first.
- Avoid impulse spending. Don’t
buy what you don’t really need. Before buying an item, ask yourself
how many hours you would have to work to pay for it. For example,
if you earn $15 an hour, you would have to work ten hours to pay
for a $150 bottle of perfume.
- Be careful with credit cards.
Credit cards can be a recipe for disaster, tempting you to buy
things you cannot afford. Credit cards are not free, and the interest
rates are high. Unless you are certain that you can pay your bill
in full each month, the safest option is to do some ‘plastic surgery’
and cut up your credit card/s.
- Never sign a contract or agreement unless
you have read it thoroughly and completely understand
its terms and conditions.
- Avoid activities or substances that may
become addictive, i.e. gambling, drugs, alcohol or cigarettes.
These can very easily lead to financial ruin, not only for you
but also for your family.
- Put your money to work. It’s
not much good saving your money if it is just sitting around in
a basic on-call bank account earning a minute amount of interest.
Shop around for the investment that best suits your needs, taking
into account such things as fees, interest rate and accessibility.
steps are discussed in more detail in Money
Management for Women by Sheila Freeman and Helene Richards.
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