Finance tips to avoid being broke

Personal Finance is a task for many people, and most of them fail because they do not get any guidance to manage the finances on a personal level. If you fall in this category, we hope the following tips will be helpful, and you’ll embrace them to be sure that you avoid being broke at any point in your life.

1. List your every source of income and expense

Listing down your every source of income and expense will help you know where your money is going and how can you save for the future. If you’re randomly paying any expense and collecting revenue from different sources, it is possible that you might be cheated by others. So, make it a point to list your every source of income and expense and work on creating a financial statement on a regular basis.

2. Think twice before entering into a loan agreement

Looking for an auto loan, you'll find auto loan calculators, and that should make your task simple. However, when you opt for a personal loan, there are many things to be looked for and kept in mind. Understanding the loan agreement is the challenging part, and if you successfully decode the loan agreement, you’ll be in a position to make necessary payments and be sure that the other party is not trying to cheat you. A personal loan is one thing that has many loopholes and others can make the most of it cheat and confused you. So, be careful and think at least twice before entering into a loan agreement.

3. List down financial priorities

With financial priorities listed, you’ll know what is to be followed and how should you go about with the residual income you have. Allocating at least 20% of the residual income towards financial priorities will ensure that you’ll be safe even during the recession phase if you have to face one.

4. Emergency fund

Having an emergency fund is among the financial basics everyone should consider. If you do not maintain an emergency fund, it will be difficult for you to make necessary amendments when the need arises. So, start creating an emergency fund and make sure that you do not use any portion of this fund still there is an actual emergency. Remember that shopping during the sale period is not an emergency and such situations should not push you to break the emergency fund.

5. Have a budget for everything

Making a budget for everything is a smart move, and it will allow you to be at ease when the time arises. Having a budget for everything ensures that you’ll be in a position to restrict yourself and avoid making unnecessary expenses in a particular category.