Friend our day start with money and end with money is that right. We spend 80% of our waking hours around money. We are earning money, spending money, thinking about money, or worrying about money. But the thing is we think so much about the money and why not, because no money no life.
We can solve our enough problems if we have enough money and this is the mantra of life. The way you think about money can make a big difference in how well you can get your money to work for you. Being a financial responsible is important in life, if you are not responsible in life then you cannot do anything in life.
Before we start just read Definitions of Financial Planning
I am showing some of the basic money practices that are considered to be financially responsible. These five simple responsible money management practices can put you on the road to happiness and wealth.
1) Do not borrow if no need
It is good that we make target and run behind that, but do not borrow too much money if you don’t need. There is a saying in Hindi “Udhaar prem ki kaichi hai” if you borrow from your friend and do not return it in time, then he starts to distrust you which is not at all good for friendship. In financial terms, this means it shouldn’t cost more than two or 2.5- times your yearly income. Another healthy estimate is that your monthly mortgage payment should not cost more than 30 per cent of your monthly take-home pay.
There are many more disadvantages of borrowing from money. Because when the question comes of money than there may arise a possibility of getting harm in your relationship. Because just think that you have taken money from any friend and you are not able to return on time than it will affect your friendship and you relation may stop going further. So be careful in this.
2) Save 3 to 6 months of income
Financial responsibility means being prepared for the unexpected. You must need 3-5 times of your monthly income in your bank account, if you have then you are safe and secure for facing unavoidable circumstance. Unanticipated medical costs are a significant cause of personal bankruptcy in the world. It is so difficult to live life on the edge where one missing paycheck pushes you into financial crisis. Saving an emergency fund of 2 to 6 months income will not only give you coverage in case something happens it will also give you peace of mind. That peace of mind is worth a lot. Peace of mind will reduce tension and stress and make life much more pleasant.
3) Work with budget
Plan your monthly budget, shopping budget do not use too much credit card for shopping. Compare your monthly budget with monthly actual amount and find out the difference.
Here is example for creating budget http://financialplan.about.com/cs/budgeting/l/blbudget.htm
4) Do not worry about others people
Financial responsibly means doing what you have to do to take care of your needs and the needs of your family. To make this happen, your focus should be internal. Other people aren’t paying your bills, so their spending habits shouldn’t dictate yours or set the bar for your standard of living. Remember that god is watching everywhere and he know very well what to give, when to give and to whom to give.
5) Use this formula for take home pay
Don’t let your spending fall too far outside these ratios:
- 35% for Home/cost of living
- 15% for travel – includes car payment and gas
- 25% for other – includes clothing, extras, vacation
- 15% max on debt loans
- 10% for Savings – pay yourself first
Ultimately, financial responsibility means living within your means, regardless of the level of those means. So take a close look at your financial situation, evaluate you earning and spending habits, and make the necessary adjustments to put yourself on responsible financial footing.If you are in a relationship be sure to talk about money with your significant other and make decisions together.
Quote of the day: There are plenty of ways to get ahead. The first is so basic I’m almost embarrassed to say it: spend less than you earn. ~Paul Clitheroe
Read our other best money saving article.
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- Important Reasons to Save Money
- How to save enough money
- MAKE MONEY THROUGH INTERNET
- WAYS TO INCREASE YOUR INCOME
Best reading:
- Save Tax Through Investment
- Basics of Fundamental Analysis
- What Mutual Fund do with investor’s Money
- Salary Definition and Tax Planning
- What is Section 80CCD
Do you have suggestions for improving the blog, or types of content you’d like to see more of? We’re all ears, so please feel free to leave us a comment below. It’s a brand new year, and we’re ready to get started!
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