The 4 Basic Rule of Personal Finance

[Fecoms]

When it comes to personal finance, there are four fundamental rules that everyone should follow. While personal finance is never just about numbers, it is often highly emotional and can be confusing. These rules can help you focus your finances and make wise decisions.​

1. The first rule: is to pay yourself first. This means setting aside a certain amount of money from every paycheck. If possible, set up an automatic payroll deduction for these purchases, as this will reduce temptations to spend before saving.​
2. The second principle: is that personal finance is not about you. A sound financial decision requires that you separate reason from emotion. Impulsive purchases or loans to family members may not be the best idea. These decisions may not be wise because they may affect your long-term investment goals. In addition, you will likely be unable to repay an unwise loan. While separating your emotions from reason is not easy, it is essential for sound financial decision-making. This does not mean you should stop buying gifts or making loans when they are needed, but it will help you avoid overspending and credit card debt.​
3. The third principle: is the most fundamental: never spend money you do not have. This is a crucial principle in personal finance. While you should invest money wisely, avoid spending money you do not have. The basic rule of personal finance is that you should never spend more than you can afford. You should never make impulse purchases or give gifts to your family. Using your money for impulsive purposes will only hurt your long-term goals.​
4. The fourth principle: A simple personal finance rule is to make sure you start saving money when you're young. The most common mistakes people make is spending more than they make. When you start saving money, it will be easier for you to save for the future. And by comparing interest rates, you can find the best way to save more. This is the basic rule of personal finance. The second principle is to always keep track of your expenses. If you have a large budget, make sure you keep track of your income.​

A personal finance rule involves saving money. A person should have a defined monthly salary and income. A good way to save money is to have a savings account that is specifically set up for this purpose. A person should also have a set of emergency funds in case a car breaks down. If you do not have the necessary funds, you should also set up an emergency fund and put some money aside for out-of-pocket medical expenses.​

 

[Jasmine]

In my opinion, personal finance mainly refers to financial planning in terms of your earning and spending (budgeting), building saving and investing strategies (money management). You need to mange your personal finance well for a couple of reasons like clearing debt, building income, saving money, investing, and last but not the least, improving your net worth. You net worth is your total worth in terms of money and wealth. You get your net worth by adding your all assets including cash, jewelry, shares, cryptos assets, property, etc. and subtracting your liabilities, loan. debts, payable bills, outstanding loan etc. You cannot build your net worth without managing your money and planning your finance. In order to build wealth, you need financial literacy. Actually personal finance also includes financial literacy. Financial literacy means having money management skills and knowledge. You do not have any skills to handle your finance, even your personal finance, you will be debt ridden, you will even have a difficulty to manage your basic needs. It does not matter how much you earn, what matters is now much you save, how much you invest. You will learn saving and investment strategies only through personal finance. You don't have to be an economist, though.

 

[catcoin11]

To me, the golden rule is: don't spend money that you don't have. Practice delayed gratification - don't just buy because "it's nice" and you have credit available. Save 10% of your monthly income - it's like paying yourself first. Don't touch your savings for impulse buys or "ego" purchases (the new model car that you don't need, but will look good in).

 

[evan hope]

Thanks, Fecoms for your four fundamental rules which should really know all the teen's ages to every ages man. Especially all the teen ages students are more important. Personal finance is the starting of a successful future.