By Melinda Opperman
We’ve been helping people be more financially responsible for over 40 years now. We’ve boiled some of our most common advice down to 10 essential rules:
- PLAN YOUR FUTURE – Plan for the future, major purchases and periodic expenses. You will not arrive to “financial freedom” parkway, without a roadmap course to guide you. Follow your plan.
- SET FINANCIAL GOALS– Determine short, mid and long range financial goals. Continue to nurture and adjust your goals monthly. Evaluate your shortcomings and celebrate your achievements.
- SAVE YOUR MONEY– Save for periodic expenses, such as a car and home maintenance. Save 5%-10% of your net income. Accumulate at least 3 to 6 months salary in an emergency fund.
- KNOW YOUR FINANCIAL SITUATION– Determine monthly living expenses, periodic expenses and monthly debt payments. Compare outgo to monthly net income. Be aware of your total indebtedness.
- DEVELOP A REALISTIC BUDGET– Learn to budget, and follow your spending plan as closely as possible. Evaluate your budget. Compare actual expenses to planned expenses.
- KEEP A RECORD OF DAILY EXPENDITURES– Be aware of where your money is going. Use a spending diary to assist you in identifying where adjustments need to be made.
- DISTINGUISHING THE DIFFERENCE BETWEEN WANTS AND NEEDS– Take care of your needs first. Money should be spent for wants only after needs have been met.
- DON’T ALLOW EXPENSES TO EXCEED INCOME– Avoid paying only the minimum on your charge cards. Don’t charge more every month than you are paying to your creditors.
- USE CREDIT WISELY– Use credit for safety, convenience and planned purchases. Determine the amount that you can comfortably afford to purchase on credit. Don’t allow your credit payments to exceed 20% of your net income. Avoid borrowing from one creditor to pay another.
- PAY YOUR BILLS ON TIME– Maintain a good credit rating. If you are unable to pay your bills as agreed, contact your creditors and explain the situation. Contact Springboard Non-Profit Consumer Credit Management for professional credit and debt advice, and inquire about our credit counseling service.
It’s easy to set sensible rules like these, but sometimes living by them is harder than it sounds. We’ve got counselors standing by to help you make sense of your budget, plan to pay off your debts, and answer any questions you have about your credit or personal finances.
Melinda Opperman is Senior Vice President of Community Outreach & Industry Relations, Springboard Nonprofit Consumer Credit Management, Inc; and Executive Director, Springboard Education Foundation. Springboard Nonprofit Consumer Credit Management is a member of the National Foundation for Credit Counseling.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.