These Are The Things You Should Really Take Note Of Before Starting to Invest Your Money
Investing early on in life means being able to have more time to leave one’s money to grow. However, one can be too hasty when it comes to setting aside a portion of their income into various investment instruments.
This may be especially true for people whose personal finances are currently still in a state of disarray. Thus, it’s particularly important that one learns to properly manage and control their money beforehand. To avoid falling into financial ruin for the sake of investing, here are some helpful habits newbie investors should know and practice first.
One Rule to Follow
One good way to manage finances is by following the 50/20/30 rule to the best of one’s abilities. This breakdown means setting aside half of one’s income and putting it towards paying for necessities. Meanwhile, 30% can be sent on one’s wants such as shopping for clothing and the like.
The last portion will then be earmarked for one’s savings or retirement. This rule can also be a gauge that people can use to determine whether they need to make some changes in their lifestyle. When expenses exceed half a person’s income, they should consider cutting back on expenses and doing a lifestyle downgrade.
Expenses Break Down
After employing the 50/20/30 rule, a person looking to invest should then go into more detailed monitoring and budgeting of their resources. This could be done by closely tracking their income as well as their expenses.
There are cases when one might think that they aren’t earning enough to invest but they could be wrong. A serious evaluation of one’s daily income and spending breakdown could shed more light on this matter.
People are encouraged to take note of all the things they spend money one and then figure out how much they actually need to spend a day. This should include everything from debts to healthcare expenses. If one is earning more on a daily basis than they are spending, the difference between the two amounts can then be devoted to investments. However, one should note that this doesn’t mean buying into the stock market right away.
Prioritizing Certain Expenses
Part of being financially responsible is prioritizing certain things. People are advised to build an emergency fund and settle their debts first before earmarking a portion of their money to invest. Aside from these, it’s also recommended to invest in one’s self first in the form of savings or maxing out one’s 401(k).
There’s also an emphasis on paying debts with the highest interest rates first. For example, credit cards reportedly have rates around 15% to 25% significantly more than that of mortgages, car loans, and certain student loans.
More in Finance & Business
Will a Lego & Tesla Partnership Finally Be Happening? This New Development Might Just Make It Possible
Lego and Tesla are two companies that are known for very different things. The former has successfully captured the market for...January 30, 2020
Think People Who Work For Themselves Have The Best Job In The World? Your Opinion Might Change After Reading This
Being self-employed may be a dream come true for some people but this career path isn’t a cakewalk at all. Proof...January 29, 2020
Find Out The Interesting Story Behind Rapper Sean ‘Diddy’ Combs’ Former Park Avenue Building That Recently Sold For $24 Million
It looks like luxury real estate is indeed a small world. An Upper East Side building, which is reportedly music mogul’s...January 28, 2020
Make Your Retirement Worry-Free With These Two Simple Steps That’ll Make Your Fund Last as Long as You Would
Saving for retirement is one thing. Making this money last long is another. Luckily, a new study from the Stanford Center...January 27, 2020
Millennials Can’t Afford Homes Yet So This Is What They’re Doing Instead
Millennials get a bad rap for being accused ‘killers’ of certain business industries. One of the sectors they’re allegedly killing is...January 24, 2020
‘You Raise Me Up’ Singer Josh Groban Just Scored This Incredibly Unique Property In One Of LA’s Hippest Neighborhoods
It looks like tenor singer Josh Groban knows how to manage his time really. Amidst planning for his upcoming tour, the...January 23, 2020
Hit Two Birds With One Stone With These Stylish Renovations That’ll Also Add Resale Value to Your Home
After living in the same home for years, one may feel the urge to make some design changes or additions to...January 22, 2020
This Is The Surprising Place Model-Turned-Actress Brooklyn Decker Gets Her Home Decor Inspo & Maybe You Should Too
It looks like Brooklyn Decker’s current starring gig in the hit Netflix comedy series ‘Grace and Frankie’ isn’t just a paying...January 21, 2020
Want To Cut Down Your Housing Expenses? Check Out These American Cities With The Cheapest Rent Prices
Living in a city has a lot of perks. It’s teeming with job opportunities as well as a variety of entertainment...January 20, 2020