Author: Kentin Waits / Source: Wise Bread
The media, money gurus, investment firms — they all have a way of making the world of personal finance seem hopelessly complex. We’ve all seen otherwise competent, capable adults go crossed-eyed when the topic of money management comes up. But don’t be intimidated by the talking heads and conflicting advice.
The most valuable rules are usually the simplest to understand. Here are the money rules every working adult should know.1. Understand your income and expenditures
Knowing exactly how much money you have coming in every month — and where it all goes — is the foundation of good personal finance. It’s the first step in creating a realistic budget, identifying money habits that are dragging you down, and avoiding dangerous credit missteps.
2. Create a budget (and stick to it)
Budgets are financial fences we create for ourselves. Without them, it’s far too easy to wander off (overspend), panic (abuse credit), and get lost (end up deep in debt).
Build a budget that addresses your needs today and helps you prepare for tomorrow by following the 50/30/20 rule: Devote 50 percent of your income to necessities like housing and utilities; 30 percent for wants such as travel, entertainment, or dining out; and 20 percent to financial goals like paying off debt and saving;. (See also: Stop Using These 5 Excuses Not to Budget)
3. Establish goals
Goals give shape to the sacrifices we make and the effort we put into managing our money wisely. Set realistic and measurable financial goals for yourself.
Do you want to pay off your credit cards within six months? Save enough for a down-payment on a home within five years? Retire by 60? Track your progress and reward yourself for incremental successes.4. Live below your means
Spending less…
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