Suggestions of experts
Ramit Sethi, the author of “I Will Teach You To Be Rich” suggests that one should spend one’s income in definite streams of expenses. The first thing that he recommends is that people should create a budget and then stick to it in a steadfast manner. To start with, he asks people to spend the majority of their income – amounting to as much as 50 to 60 per cent – for the fixed expenses. This includes costs such as rents and/or mortgages, various utilities, bills to be paid for cell phone calls, insurance, payments for private vehicles, and other miscellaneous expenditure such as groceries, internet and clothes etc.
Next, Sethi says that 10 per cent of one’s income should be dedicated for making investments from the money that is left after paying the taxes. As far as savings are concerned, Sethi states that 5-10% should be kept aside for the purpose. Young people can save up for a variety of purposes such as going on a vacation, making down payment on the house that they have always wanted to buy. Savings also come in handy during wedding or at times of emergency. Sethi says that the remainder of the money should be used for guilt-free expenses.
He feels that every person needs to spend for fun and expects young people to do it more often than others would. This segment includes expenses such as going to bars, going to see a movie, attending a game or using cabs etc. Going by this approach, it would not be unwise to suggest that Sethi exhorts people to spend more money on things that they love and less on things that they dislike, and still be able to save some money that would come in handy later on. Bill Schultheis, who has authored “The Coffeehouse Investor – How to Build Wealth, Ignore Wall Street, and Get On with Your Life” has his own take on this issue.
Schultheis proposes that people should save for later but they should also invest some money for the present. He prioritizes areas such as mutual funds and stock markets for young people, provided they are interested in the same. He says that 10% of youngsters’ money should be used for investment – it does not matter what kind or form it is. He also says that young investors should not shy away from the prospect of losing their money in the stock market. Any loss suffered in the present would only make them wise in the future.
The author of “FAFSA Made Easy: Getting the Most Out of College Financial Aid” Arthur Isabella suggests that a 50-30-20 plan should be followed by young people. Isabella says that 50% should be dedicated towards regular expenses, 20% should be for debts and retirement savings and the remainder of the money should be used for recreational activities. He says that one should recognize the basic fact that all our expenses are related. Considering the critical condition of the job market he recommends that there be three kinds of budgets – one for good times, one for normal times, and one for when nothing is working.
Importance of self control
It is very important to be controlled in one’s expenses. Quite a few of us are lucky in the way that we inherit the virtue from our parents and it is drummed into us. With proper control on your expenses it will always be easier to maintain a leash on your spending as well. You can always use the credit card to buy something but isn’t it better to save for the same and then buy it?
It is not really worth it to pay interest on something as daily and mundane as a pair of jeans or a box of cereals. If you are not able to control your urges, it does not matter how much you earn at the end of a month – you will keep paying for them for a decade. In case you want to make sure your credit cards can be used for convenience expenses or for availing the rewards always pay the whole balance when the bill comes to you at the end of a month. Also, be sure to have only that amount of cards, which you can keep a hold of.
Be responsible for your own financial future
You should always remember this – if you have no idea as to how you can manage your own money others will always find ways to wreck your ship. Some of them can have bad intentions such as financial planners who work on basis of commissions and operate in a Machiavellian manner. Others might have only your good at their heart but they have no idea of what they are doing. Among them could be your own family members who might wish you buy a house but have no knowledge as to how you would pay off the mortgage.
There are certain other things that you should keep in mind:
- You should know where your money is going. Read “5 Easy Ways to Plan Your Spending and Increase Your Saving“.
- Create an emergency fund
- Retirement planning should be as quick as possible
- Understand taxes
- Have a healthy lifestyle
- Get as much insurance as possible.
Whenever it comes to relationships money assumes a significant amount of importance. When you are planning for your wedding you need to be very clear about what you want and that too, right from the start. It is always better to do it right at the start rather than later. Both you and your spouse should be absolutely clear on how financial issues are to be dealt for the length of your married life. It is also not unusual to see family members from either side come in and have their say on these matters. This will only increase if they are paying for some expenses in your marriage. This is especially true for in Singapore context.
All of us have a notion of how our dream weddings would be in our own minds. Quite often people might want to include traditions and other ideas in them and they could argue strongly to back themselves up. It is always important that you listen to them. However, you also need to keep in mind that it is your responsibility to take the final decision since it is your big day and not theirs. So, you should always assume control and focus on having the wedding you always wanted to – not how others would prefer it to be. Also, be careful to avoid spending money on things that you do not want in your wedding.
Importance of having a budget
Before you walk down the aisle you should work out how much you will be able to spend in your marriage and spend likewise. You should also have a clear idea of what will be needed in your marriage. The list could become rather long. You should not forget key expenses such as honeymoon and other additional expenses like traditional gifts for wedding day as well as games that may be arranged during the marriage ceremony. You should also have a contingency fund in case any unexpected expense comes calling.
Not everybody in this world is born rich or capable enough to earn and save enough money so that he or she can foot the wedding bills all by him or herself. Personal loans can often help in such scenarios. However, please use licensed money lender as one of the ways, if that’s your direction. These loans normally carry higher rates of interest compared to other kinds of loans. However, if you are not taking a specific loan such as a wedding loan then it is always good to go for personal loans.
However, there is one thing that needs to be kept in mind. If you are looking to take a specific loan such as a car or a home loan, then having a personal loan can significantly impede your chances of getting that loan. The creditors normally look at whether their debtors have another loan or not and balk at the prospect of lending to people who have already taken loans.
Ways to choose a personal loan
The first thing in this case is to know the amount of money needed. The loan should never be taken for just about any amount or on whim. You can talk with important people such as wedding planners, suppliers, caterers, and ones who are providing the wedding venue regarding the expenses that you will incur with them. This will give you a clear picture of the amount that needs to be taken out as a loan. You should also understand the fact that the rates of interest on personal loan do not always stay the same. So, apply as soon as you can so that you can get the best rates possible.
Also, do some research on these loans and see when their rates are on the downswing, because that is the best time to get them. Also compare all the loans available in the market. That way you will have a clear picture of things and be able to make an informed and wise choice.