33 main rules of conducting finance in our time

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

The vast majority of people are financially illiterate. This is used by interested individuals from the top, banks, credit organizations, scammers, sellers and many others. Today we bring to your attention a list of short, simple, understandable and very effective rules for managing finances that will help you in life every day.

1. Spend less than you get

If there is a key fundamental rule of finance, this is it: your expenses should be less than your income. You MUST follow this rule, otherwise your whole future life is called into question.

Going into debt and living on credit because "everything will be fine"? This is what the people who give you loans say, and they will really be fine.

And you? You have accumulated debt without saving. Only a miracle will help to find financial well-being with such an approach to life. Do you believe in miracles?

2. Simplify your financial life

The more loans and credit cards, the greater the chance of not noticing the loss of funds or missing the next payment. The more deposits and accounts, the more difficult it is to keep track of them and the easier it is not to have time to react to emerging problems. The more difficult your financial life is, the more time and effort it takes. At the same time, there is a greater chance of getting confused and making a financial mistake.

3. Never let the "future self" control the situation in the present

Do you want to buy something that you cannot afford now, because in the future you will receive more and easily pay off your debts? Most likely, you will regret this decision for a very long time, because your “future self” may receive the same amount and even less, or even lose your job.

Even if your financial situation improves in the future, there will be other expenses that will not be so easy to deal with without the mistakes of the past.

4. Start on the path to good financial management

• Step 1: Create a cash reserve for emergencies. Cash is still needed and resolves unforeseen problems quickly, on the spot, without going to the bank, without fiddling with bank cards and problems with service. It's easy to start creating a reserve. Start saving a certain percentage of your income each month. For example, 10%. Or 15%. This is in full accordance with the first rule of financial management, and after a year you will be able to enjoy a decent amount of accumulated money, which will help you out in any emergency. In the future, part of the accumulated funds can be transferred to a deposit or put into business.
• Step 2: Get rid of debt with the highest interest rate. Sort your debts by debt growth, select the one with the highest interest rate, and then start paying off this debt twice as fast, that is, in double payments. Do this monthly until the debt is paid off. Then add the whole amount of the freed up amount of money that you spent on repayment to the payment of the second debt, until that one is paid off. And so for all subsequent debts.
• Step 3: when there is a stash in case of emergency, and debts are closed, you can start thinking about a pension. This can be a bank account, investments, and any other way to preserve and increase capital.

5. Create a budget, just do it right

The budget is the best means of control and planning of finances, but only with the right approach.

How does a smart person plan a budget? He does this based on the statistics of expenses for the previous months. That is, you can fantasize and say to yourself: "Well, well, I will spend so much on food, and no more." But then the harsh reality will come and put everything in its place. Better to rely not on assumptions, but on real cost statistics.

You keep statistics on expenses, right? It will help you not only plan, but also find overrun items.

6. Optimize all your planned expenses

We get a lot of bills. You can start at least with the same services of a cellular operator.

Do you need all the connected paid features? Here 50 rubles, there 20 rubles, 100 rubles somewhere else. In total, it will turn out very decently, and you just give it all away every month. It is useful to do this kind of general cleaning every few months.

7. Calculate your real earnings

Subtract taxes from your annual earnings and all expenses directly related to work, including dining out, work clothes, and the like. Then you count how many hours per year you actually spend working, including all overtime and homework. Divide real income by real hours worked. That's how much you actually get per hour of work.

8. Use real earnings as a unit of measurement for any purchases

Now it will be much more interesting to buy.

The purchase price becomes the numerator, and the real earnings become the denominator.

This application is equal to two hours of my life. Is it worth it? And this TV is worth two months of life? Maybe it's better to take the smaller one over there? Now you can always answer your own question: "What am I spending my life on?"

9. Ignore the "experts"

The media is full of articles from various financial "experts". However, you will not be able to remember the name of any such connoisseur to whom the phrase would apply: "The things he spoke about really helped." The same applies to all kinds of predictors and other advisers. Their publications can be paid for, aimed at the interests of third parties, but not at yours.

Why would such an expert publicly disclose any valuable information? Is he getting paid for it? Then the company he works for surely took the advice, and you will get crumbs at best. An outside expert will never know everything that happens to the reader of his publication. Their data can be erroneous and often unfounded.

If you are not able to make plans and forecasts based on your own analysis and you definitely need an expert, then you have a problem. It is not surprising that no one has learned to reliably predict the future. If you fear for the future, then your only option is more conservative investing. The rest is up to you - work on your own risk tolerance.

10. Set big goals and remind yourself of them

What do you want after all? What is all this money movement for? This is a difficult question, but it is he who can become the strongest motivator for you, as well as suggest the right paths in life and help you go through them.

Want to stop working early? Do you want to start your own business? Trip around the world? Whatever it is, remember the goal, keep it in mind. Surround yourself with reminders of your main goal. They will help you make the right decisions in numerous situations on the way to what you want.

11. Buy a practical car

Practicality means low maintenance and repair costs, low fuel consumption, minimal transport tax and a reasonable cost of insurance. Otherwise, you get a monster sucking money, which will go to a decent share of the income.

Pontus is more valuable than money - the main truth of a fool in life.

Nobody cares at all, including you and your cool car.

12. Treat your car like a reasonable person

Since we are talking about savings, then do not forget about fines and fuel consumption depending on the speed. And if everything is clear with the latest news from the traffic police, then fuel consumption is a more delicate question.

When engineers create a practical car, they usually expect that it will be driven around the city and at the speed allowed in the city. In this mode, the engine consumes less fuel, and constant acceleration at high speeds from traffic lights to traffic lights is the way to more frequent refueling and premature repairs. Insufficient tire pressure increases fuel consumption, and ignoring minor signals about a car malfunction can lead to major breakdowns and accidents.

13. Understand the payment of utilities

Perhaps you are still paying for the radio, the receiver of which was discarded during the repairs before last. Calculate the feasibility and size of savings when switching from average tariffs to water and gas metering and a two-tariff electricity meter. Also buy these energy saving light bulbs. They really reduce your light bills.

14. Master basic home renovation skills

We do not suggest you lay the tiles in the bathroom or cook the pipes yourself, but replacing the socket or changing the gasket in the leaking faucet is so easy. There are many easy-to-understand video tutorials on these topics on the Internet.

15. Teach children about financial literacy by example

As stated at the beginning of the article, we were not taught this. But now you can become a teacher to develop these skills in your children by demonstrating in practice the benefits of being smart about money. It is important not only to broadcast, but also to show them these rules in everyday life.

16. Ignore ads

Perhaps, in terms of importance, this rule can be placed immediately after the first fundamental law on the prevalence of income over expenses. We live in a consumer society. Demand in such a society is not born in the minds of people, but is imposed from the outside. Advertising creates artificial needs, values and ideals. Moreover, she does it so competently that we sincerely believe that a certain icon on an ordinary smartphone makes it exceptional, and a specific tag on a shirt made of ordinary cotton increases its price 10 times quite justifiably.

Brands, image, style - we have long relied on concepts that are far beyond the really necessary things for a comfortable life.

Understanding everything that happens around, an intelligent person will not rush to extremes, that is, he will not want to become an ascetic. He will just avoid external imposition as much as possible and buy things only on the basis of an analysis of his own needs.

If you learn not to buy things you don't need, you can save the lion's share of your income for more rational spending.

17. Find low-cost hobbies

Many hobbies require a decent chunk of cash. The adage that the costs of a hobby are not counted is invented by cunning people selling something related to a particular hobby. The only question is which hobby you choose for yourself: collecting unique mechanical watches or improving the skills of playing a musical instrument that you already have.

18. Search and try free

People in one way or another strive to find like-minded people. This is how interest clubs are formed. They are non-commercial, that is, you will not be shaken by money there. This way you can find good friends and never overpay.

Surely in your city there are also fishing enthusiasts at any time of the year who do not offer to rent an expensive boat and equipment. There are also desperate travelers, NOT travel agencies. Thanks to social media, finding such communities has become easier. Try to give them a chance. It is quite possible that this will allow you to do what you love in the company of the same enthusiastic people and you will not overpay for anything.

19. Ignore what others think

The laws of a consumer society are not only meaningless, but also very aggressive. Not following the rules? You will become an outcast. Fortunately, this only works with very narrow-minded people, and a more or less reasonable person understands that neither a machine nor other paraphernalia will impress another as much as reason, intellect, ideas and actions.

20. Never mind how others spend their money

Do you think that this person is better than you, because he is driving a sports car, and you are not? You don't have to spend money on things other people like. Spend them on what you like.

21. Invest time in building good, reliable, lasting relationships

Having many personal and professional connections with other people will serve you well in life. It is emotional, social, professional, spiritual and financial support for all your ideas and endeavors.

By becoming support for others, you will find support for yourself in them.

22. Spend one hour a week analyzing your finances, career and life

The more often you revisit your current situation and position, the more likely it is that you will find discrepancies with your goals early. Analyze the events that have happened over the past week. Think a week ahead.

Does everything fit into the concept of your long-term goals? What's your biggest accomplishment this week? What bad happened and why? How can this be avoided in the future? Are your long-term goals as desirable for you as they were before?

23. Make the dream your side business

Each of us has an occupation to which we would like to devote our lives. The problem is that we do not see ways to monetize such activities, and therefore we leave them only in dreams. Try to devote some of your free time to this business.

Just start doing what you dreamed of. In the process, you will surely come up with a way to earn money on the occupation of your dreams. This could be a YouTube channel, website, or book. Just start doing your dream job in your spare time.

24. Use the 10 second rule for cheap purchases

The 10-second rule helps to combat impulsive buying.

Did you see something inexpensive and immediately want to buy it? Keep this thought in your head for 10 seconds and honestly ask yourself the question: do you really need this thing?

Do not hide the negative aspects of the purchase from yourself. Walk actively for reasons why you shouldn't buy this item. Will this purchase help you achieve your goals? Is the benefit of this purchase comparable to its price? Often these 10 seconds are enough to understand whether you really need a thing.

25. Use the 30-day rule for expensive purchases

For expensive things, the 10-second rule is not suitable, because in this case we are talking about a purchase, the expediency of which cannot be determined in such a short time. When the question arises about serious spending, you need to wait 30 days.

You will clearly notice the first impulse, the first internal call to buy, and then calmly wait a month. During these days you will be able to thoroughly study the planned purchase, learn a lot about it. Something that you will not be shown in advertising. With a high probability, after 30 days, there will be no trace of your keen desire to buy this thing.

26. Create a menu for the week

A clear diet is not only health and body benefits, but also savings. Improvisation in questions of "what to take for dinner" leads to an increase in the cost of food. Once again, you will be just too lazy to think, and you will order pizza. Or go to a junk food cafe. All this is harmful, including for finances.

27. Go grocery shopping with only a shopping list

There are dozens of shopping lists in the App Store and Google Play. For these purposes, you can adapt the built-in reminders and, in general, any application where you can make a simple list. Nobody canceled the usual sheet of paper either.

The point of shopping lists is not only so that you don't forget to buy, but also that you don't buy too much. We walked through the list, left everything planned in the basket - and to the cash desks.

All this yummy, especially on an empty stomach, can make you make an impulsive purchase, but with a pre-planned list, the chance of making a rash action is greatly reduced.

28. Buy well-stored food from cheaper hypermarkets

There are perishable foods that we buy almost every day. It is not always justified to constantly go to a remote hypermarket with lower prices for them. But a planned large-scale purchase of well-stored products, which you carry out once a month or even less often, it is useful to make it in stores with lower prices.

Even if the difference in the cost of each individual product seems minimal to you, in the aggregate, a large purchase will save a decent amount. If you don’t practice scheduled restocking at all, then it’s time to start doing it. Retail chains compensate for the large number of outlets and the subsequent step-by-step availability with increased prices for goods.

29. Find the cheapest store nearby to buy perishable food

You can go to the same store for years out of habit, and at the same distance from your house there is another store with lower prices.

Dedicate one walk to exploring the nearby shops. Write down the prices of the products you buy frequently and compare them.

30. Reduce the number of processed foods you eat

Semi-finished products are products that are partially or completely ready-to-eat. Almost always, the cost of such products is overestimated, and their harm is difficult to overestimate. You pay for convenience not only with an extra ruble, but also with health. It is easy to learn how to cook simple meals at home, and you will always know their ingredients.

31. Cook in advance for the weekend

On weekends, too lazy to do something. Even cook. This is where the idea of ordering pizza or walking to fast food comes in.

32. Save on bad habits

The decision to rethink your approach to finance is the perfect time to kick your bad habits along the way. Stop convincing yourself that alcohol and nicotine do not bother you, and that soda is not at all as harmful as professional doctors say about it. You plant your health at your own expense. Is there any great stupidity in this world?

33. And remember: things will never make you happy

Happiness comes from within.

No external paraphernalia will make you happy if you have conflicts with yourself and distortions in the perception of the objective world around you.

Don't fall for the idea that having something will make you happier. Money will improve the standard of living, but it will not bring happiness. The only emotional benefit of money is reducing stress and increasing self-confidence through financial well-being, and achieving financial well-being is only possible with the right handling of money.