When the economy crashed in 2008, personal finances around the world were thrown into the air. People living on fixed incomes, already struggling to put food on their tables, saw profit margins cut and their livelihoods were torn apart. Those who had gone from wealthy to wealthy quickly found themselves desperate just a few years later as the value of their investments vanished.
1– Develop a budget
When the economy took the plunge, many people found themselves in shock, asking “How did I get here?” A budgeting system will help you to chart your income and expenses so that you never find yourself in debt, or worse, lose a home to foreclosure.
2- Consider an emergency fund
In today’s economy, it doesn’t take long for things to go bad. You may be laid off from your job unexpectedly, have medical bills that you can’t pay, or find yourself involved in an accident where your insurance won’t cover all of your expenses.
3- Consider an IRA
If you’re not yet at retirement age, the suggestion of an IRA may raise some flags. However, IRAs can be a smart move if you’re concerned about the state of your retirement funds in the wake of recent economic strife.
4- Get out of debt
It doesn’t matter how good your budgeting system is if you’re struggling under the weight of credit card payments or loan payments.
5- Avoid debt
If you’ve become caught up in the trap of debt, it will be near impossible to stop the downward spiral. You may find yourself saddled with high interest rates, late fees, and more than you can afford to pay.
6– Protect your investment portfolio
In good times and bad, there are few things that can do more damage to your personal finances than a major loss on one or several investments. A safe broker like Oanda can help you with algorithmic trading and safe investments.
7- Be careful when investing in a new business opportunity
When times are good it sounds like a great idea to invest in a new business that promises to be the next big thing. But things can turn around quickly with the economy. Before investing, consider how long the company has been established, how large of investment is being made, and see if there are any success stories from other investors.
8– Avoid investing in your business
It may seem like a great thought to invest in your personal business. You’ll show up at all the meetings and really get to know everyone on the team. But the chances of risks are also higher in your own business.
Also read: How I Improved My Stock in One Day
9- Your personal financial situation is separate from your business
While you’re working to get your personal finances back on track, you’ll want to make sure that you don’t have a similar problem in your business.
10– Know Your Tax Bill
Your taxable income, for tax purposes, will be much higher than your actual income or the amount that you receive in paychecks each month. Be sure to do research on each and every deduction you believe to be applicable to you so that you can accurately record your expenses for tax purposes year after year.
These are only a few best practices for personal finance but there is a world out there you need to explore. Safer investments lead to safer returns and balanced financial life.