Ask Away...: Protecting Your Money: For Beginners

Thursday, February 1, 2018

Protecting Your Money: For Beginners





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Money management requires discipline and a cool head. Even high-earners can ruin their financial situation through careless spending or a failure to put some of their income aside for the future. It might sound like a stereotypical thing to say, but it really doesn’t matter how much money you make - what matters is how you use your income. Whilst life is unpredictable at times, as we’ll discuss throughout the article, there’s a lot you can do to prepare for the unexpected and to manage the costs that you do expect. If you’re struggling to stay afloat in a financial sense then here’s some helpful advice for beginners when it comes to protecting your money.




Budgeting.

If you really want to protect your money then you need to start budgeting. Tracking your income and expenditures is the best way to ensure that you use your money responsibly. Make a list of all the necessary things you need to buy each month so that you can calculate how much this eats into your earnings. Gas, groceries, rent, and utilities are all examples of the unavoidable costs that you should write down initially. Your budget should also account for debt repayments and other important bills that definitely need to be covered before you can even consider luxury expenditures. Again, this isn’t to say that you can’t treat yourself to things in life but simply that you need to prioritize the absolute essentials before anything else.




When it comes to luxury expenses, you need to learn when and when not to spend your money. When you have a budget, you’ll know how much disposable income you have in your account. However, as we’ll discuss throughout this article, disposable income isn’t there to be spent in its entirety; there are other smart ways to use your excess cash. So it’s important that you exhibit some restraint when treating yourself to costly things. Try out the 30-day rule whenever you’re tempted by a purchase in a store or online. If you still want that item in 30 days then you can buy it. If you’ve already forgotten about the item in question then you probably just stopped yourself from wasting money.




Unexpected events.

Whilst you may earn enough money to cover all your expenses in the present day, you should really think about the excess finances you have in your savings or personal bank account. Whilst you can budget your planned expenditures and ensure that you have just enough money to cover everything, unexpected events can come with a price. And if you don’t have the funds necessary to cover such unexpected events then you can find yourself in a tricky situation. You don’t want to have to borrow money to cover such costly surprises when they arise out of the blue. That’s why you should protect your money by taking out insurance for all the important things in life. Additionally, you should be saving some of your money so that you have an emergency fund for any unplanned costs that arise, but we’ll discuss that more in the next point.




Of course, not all accidents or unexpected events can be avoided in life. Through no fault of your own, you might find yourself involved in a car accident that comes with a hefty medical bill or an injury in the office that puts you temporarily out of work (meaning your income takes a hit). These incidents are traumatic enough without having to worry about the cost of the damage. When it comes to protecting your personal finances in such situations, you might want to look into a personal injury lawyer who can get you the compensation necessary to balance out your financial situation. It’s important that you take the necessary steps if life ever throws you a curveball. You can’t always prevent accidents in life, but you can prevent the financial damage that often comes as a result of such events.




Saving your money.

Protecting your money, most importantly, is about knowing when not to spend it. And that doesn’t mean you have to cut corners or compromise on important things in order to reduce your cost of living. There are lots of ways to reduce the amount you spend on the essentials without having to actually give up the essentials. At home, for example, you could save a lot of money on electricity by better insulating your house; if your home is better at conserving heat then you won’t need to generate as much energy to keep it warm. In addition, you should have an emergency fund in place to act as a financial safety net. If you set aside a fixed percentage of your income on a weekly or monthly basis with an automatic standing order to your savings account then you won’t have to worry about your financial safety net; it’ll all happen without you having to think about it.









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