How to be financially smart

How to be financially smartI have only myself to depend on for my financial stability. ~Marie Helvin

How to be financially smart? That’s hard, don’t you think?

It’s much easier to get yourself into a financial mess, wouldn’t you agree dear reader?

Let’s face it, we all want it all and we all want it now, surely?

Certainly it’s not unreasonable to want to have some fun, is it? We all deserve a little bit of fun, surely?

And naturally you want to spend your money on lots of nice clothes and exotic weekends away with your friends too. Life’s too short not too, wouldn’t you agree?

The problem is, if you adopt this approach to life, your money’s spent before it’s earned. And that’s when you’re heading down the road to financial disaster if you’re not careful.

Some readers may argue that it doesn’t matter, as long as you’ve got your ‘flexible friend‘ to pay for everything. Life’s fantastic when you’ve got plastic!

And maybe it is, until you hit your credit limit and the bills start piling up.

Then your wardrobe is cluttered with clothes and shoes you’ll never wear and you’re burdened with expensive credit card debt which you’ll struggle to pay off.

And very soon a small debt becomes a large debt due to the ‘magic‘ effect of compound interest.

How does the story end? Basically it only ends one way. A financial mess, even if it was one you thought you could avoid.

Does this sound like you dear reader? If it does, you’re not alone.

However if you’re in a financial mess and you’re not sure who to blame, then just take a long, hard look in the mirror. The person to blame will be staring right back at you.

It’s not the fault of the government. It’s not the fault of your current or previous employers. Your parents are not to blame either.

You are captain of your own ship. So you must start taking responsibility for yourself and your own financial well-being. However, with a little bit of thought, it really isn’t difficult.

The first step is to stop wasting your money, buying things you don’t need in an attempt to impress people who don’t really care anyway.

If you’re thinking about how to be financially smart then remember this; Credit cards may be a convenient means of paying for things and they tend to be the preferred method of payment these days for young people. However they’re also weapons of mass wealth destruction. That’s a fact dear reader.

If you want to be financially smart then just follow these rules:-

Rule 1:

Never, ever buy anything on a credit card if there’s even the remotest possibility the you won’t be able to pay off your bill in full at the end of the month.

Credit card debt is unsecured which means that it comes with very high interest rates, always!

You must recognize that debt with high interest rates increases rapidly, if all you do is make minimum payment each month.

Rule 2:

Think carefully before you spend.

Ask yourself these questions before you make a purchase, whatever it is:-

      1. Do I really need it?
      2. Will I really use it?
      3. Can I live without it?
      4. Would the money be better utilized is some other way?
      5. Would I be better saving my money?

Rule 3:

Be sensible with your money. Spend it wisely and sparingly. 

Being sensible with your money might sound boring but it’s less stressful than the alternative, trust me. High levels of debt can be very stressful.

Conclusion:

How to be financially smart is not difficult.

The key to this is to avoid getting yourself into a financial mess in the first place. You’ll find that this is the least stressful approach to life.

However, if you’ve already got yourself into a financial mess, then don’t moan about it. Make sure you do something about it instead.

And that starts with paying off debts as quickly as possible and learning to spend your money wisely by following Rules 1, 2 and 3.

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