There are a few simple truths about how people tend to overspend their income. It usually happens in one of three ways. They tend to buy cars that are too expensive, houses that are too big, and they spend far too much on entertainment.
So, what can you do to come out ahead when it comes to personal finances? Here are 5 pieces of advice that could change anyone’s financial situation into a success.
As we mentioned, people tend to overspend on things they don’t really need. If you find it hard to live within your income, you should really think about downsizing in areas that aren’t really necessary.
You don’t really need the best car or the biggest house, and finding entertainment doesn’t always have to be expensive.
Purchase Your Next Car With Cash
Instead of opting for a brand new vehicle with all of the bells and whistles, aim for something more within your budget. If you have anything in savings, consider making that your budget for your next vehicle.
Use that money to purchase your car, and instead of making payments to a bank to pay off the car, make those payments to yourself. That way, the next time you’re ready for a new car, you can continue using the money in your ‘savings’ that you’ve been paying toward as your new budget, which will only grow over time.
Try to Live on One Income
If you’re married or about to become married, consider trying to live off of just one income, while saving the other. Put one income directly into savings, and allow the other to go into checking.
In a year’s time, those savings could equal a payment on a new home, or if you have a child or go through a tough time, you’ll have a year of income already saved up.
Pay at Least One Extra Mortgage Payment Each Year
For each year that you pay one extra mortgage payment, you can shorten the length of your loan by years. You can easily do this by bumping up your usual monthly payment by just $50.
Over time, it will really start to add up and you can pay off your mortgage more quickly than expected.
Don’t Take Jobs Because of Money
When you search for a job, you shouldn’t let the money involved be the most important factor. Of course, you shouldn’t allow yourself to be short-changed, but you should find a balance.
Instead, find a job that pays well enough, but also factors in your individual talents, strengths, and skills, while also allowing you to make a difference in the world.