TOP 10 PERSONAL FINANCE RULES YOU SHOULD KNOW

Top 10 personal finance rules you won't learn in school. Have you ever thought what you learn about personal finance in your college days? Credit? Investing? Money management? Is it like that were you only take courses which are mandatory for your graduation? Well, most people these classes were more or less pointless, just like calculus, astronomy, and anthropology. The longer I've been out of college, the bitter truth of college end days is that you realizes that what you learned throughout does not include much information. You have already heard more than 100 times that get educated, get a job and everything will be well after that. But, unfortunately, it's not that simple for you to succeed in the world you need to know a lot more about money than what school will ever give you. No one teaches you directly but personal finance is the backbone of all success stories. To save you from the hustles and bustle of having to learn from your mistakes, I have collected a list of the 10 most important rules that everyone should accept by to be ahead of the game with their finances. Grip your seat and read and write, here are ten of the most important personal finance rules you will never learn in school.

9. BUYING YOUR FIRST HOME

You have probably heard of the popular statement, 'if you want to buy a home you have to save up to 20% of the value for a down payment.' if you don't you will be forced to pay private mortgage insurance, which could dent your account. What you won't learn in school is that while higher mortgage payment may be painful, the financial trade-off between paying more money now and waiting to save up the 20% deposit could be worthwhile when we look at the macroeconomics factors in the US over the past decade the appreciation rate of real estate has gone up but the wage levels have remained stagnant so it makes it unrealistic to start saving up 20% of the home value as it will only increase drastically over the years the rule behind this is if you can save the money within at least five years comfortably then go for it. But if it will take you longer you'll be chasing a moving target as the price increases 9 save in school they'll teach you to have at least 10% of your income but let's be honest here this isn't enough to retire on well unless you're earning millions for most of us with a regular pay check a decent savings percentage will be about 25-40 percent we're not saying 10% entirely useless if could be a great starting point to build that savings muscle to save more reduce your expenses and pointless costs, like buying a cup of coffee for yourself every morning put that money for your future goals and invest those bucks in saving account or other funds with a better interest rate.

8. EMERGENCY FUND

You may have never heard of an emergency fund from school but you're lucky you have us to teach you about it according to recent research it shows up that nearly 40% of American don’t even have emergency fund which cover an emergency of up to 400 dollars, and this is really need to be considered as we already saw the COVID pandemic situation. What if you lost your job today would you have enough money to cover your costs the golden rule is to have six months of expenses saved up somewhere but we suggest that if you can make it more the better.

7. BUDGETING BASICS

Budgeting is quite important in life yet you won't hear anything about it in school sadly not understanding the basics of budgeting while in school can leave you at a disadvantage right after graduating especially once you move out not knowing how to manage bills and create the distinction between wants and needs can lead to one enduring, one hardship. Everyone work hard for money likewise everyone should understand and know how to plan lifestyle according to their earned income. This comprises considerate how to plan for all bills but still safeguarding, there's enough left for requirements such as groceries and savings, but let's face it as much as budgeting is important no one likes tracking every single penny they use what you can do instead is what refer to as planned budgeting this involves creating budgets and plans over a long period, for example, you can identify what you need every month and create a budget with the needs once and respective costs over the six months from the arrangement made you would then be able to isolate the sums into various records to guarantee you don't spend over your spending then periodically you can allude to your rundown to keep focused.

6. COMPOUND INTEREST

The power of compound interest is possibly the best-kept secret the one thing every young person has an advantage over everyone else's time while they may not achieve their financial goals instantly they have an upper hand when it comes to investing all they need to do is tap into the powers of compound interest by setting aside small chunks of money in a high end to count young people can amass great wealth that will compound over and over again through the years. To show you how important compound interest is here's a great example if someone gave you two options the first choice is $3000 and the second is a penny that doubles up in value every other day most people would choose the first choice right you probably did too but if you do the math the second choice would be worth 10 million dollars after 30 days only. If you are still not sure to start growing your wealth and you are still not convinced till now I don’t know what it will be for you to start this.

5. SECRETS OF CREDIT

Secrets of credit most young people right after getting their first credit cards to end up making them out they then end up with a life full of debt where they forced to pay up huge chunks of interest rates and in some cases this results in late payments that could adversely affect them what most people don't know is the importance of credit scores and maintaining a great credit history but they would probably be aware of the secrets if school paid more attention to training them on this life expertise here's what you must know about your credit score is one of the supreme important parts of your financial health and it generally determines your financial position. As an adult with the proper score it's a lot easier to purchase a horse get a car get a business loan and makes it much easier to achieve other milestones in the future. One should not ignore the importance of credit card, everyone needs to know how to build credit and have a proper score all the time here are a few pointers on how to achieve this one get a credit card most people think getting a credit is a mistake but it is actually quite important in building your credit score let me give you back good example so I have a friend called Michelle just like some people he avoided getting a credit card for most of his young years after graduating from school doesn't sound like a big problem right but when he started looking for home to buy and a car he couldn't get any loan approved because his credit statement hadn't been established here's how it works when you get a credit card and use it financial institutions records all your transactions and interest payments based on your efficiency they'll assign you as score to your name now when you go looking for loan that score determine the loan amount you can receive and the interest rate to always pay your debt in time there's no other way around this is money is due today make sure you pay it today.

4. RULES OF INSURANCE

If there is anyone who depends on your financially then you need to get life insurance. This could be your child, spouse or parents it is better to get a term policy rather than a life one as you get coverage whenever the need arises however if no one depends on you financially in the policy to save on money in addition to life insurance get insurance for other aspects and assets your own this includes your car home expenses assets and health you can also get umbrella insurance which covers different policies and guarantee the discount if obtained from one insurer take your time to get different rates and the features available before choosing a company to insure.

3. TAXES

Taxes is a large and large topic which you hardly learn in your schooling days. It's important to understand how they work if you want to be on the right side of the law before you get your first pay check or make any sales from your business learn how to calculate the tax rate and find out how much money you'll be left with this will help you determine whether a job offer will meet your financial needs and what the appropriate pricing strategy for your products or services are plenty of online calculators that will do the dirty work for you they will show you the gross pay the amount payable in tax and the amount left in your account also knows as the take-home pay, for example, a salary of $35000 a year in Manhattan New York we'll leave you with about $26399 after-tax deduction also pay attention to the marginal tax rate that affects you raise for example a raise of $35000 to $41000 a year won't give you an extra 500 dollars a month but $345 make a habit of preparing your tax returns yourself there's a lot of misinformation and bad advice out there be careful.

2. GUARD YOU HEALTH

A hospital visit for an injury like a fractured knee can cost thousands of dollars without insurance if you're finding it hard to meet your monthly premiums what will happen if you end up in the emergency room you may end up having to borrow money to pay for your medical bills burdening about people who had plans with their money doesn't sound fair right if you don't have medical cover get one ASAP also taking care of your health can end up saving you a lot of money this involves eating the right foods maintaining a healthy weight regularly exercising not consuming alcohol and other addictive excessively you don't want to be sorry so guard your health today.

 

1. COLLEGE ISN'T 100% NECESSARY 

Contrary to what everyone believes that student loans go hand in hand with a college degree you actually don't need to get one to achieve the latter eighty five percent of new graduates complain of the heavy debts five percent of new graduates complain of heavy school debts and the chunk of the money that goes to paying it off immediately after they start working it's not always a must that you get these loans to pursue your degree some institutions like Davidson college offer great education at a fraction of the private schools tuition fee in a more affordable school graduate fast or being your journey in a community college but we're not saying debt free schooling should be everyone's goal in some cases it might be worth it if you are set to launch in a very high paying career path then a few thousand dollars shouldn't get in the way however don't establish this debt as the main factor of existing as a college student there are so many other ways of achieving your career goals.