1. Accept the reality that you cannot manage your personal finance the moment you recognize it. Spending depends on other attitudes such as behavior and choices. Managing finances is all about lifestyle management.
Before you look forward to spending your money, think of saving first. Normally, monthly savings should equal to 20% of your monthly income. This rate of savings can help you set up savings enough to buy a new family home.
2. Do not underestimate what a budget can do for your personal finance. Treat your budget as a friend, not an enemy. Your budget will help you plan your spending, including the timing.
Your budget helps you make an intelligent decision on your borrowings. It sends you the signal that you are spending beyond your earnings.
3. Taking a home equity loan should be the last resort. The home equity loan is arguably the most regretted personal finance decision of all time. People take out home equity loan as an impulse response to a bank salesperson or a TV ad. Aside from adding to your debts, the bank can sanitize the loan’s increment and inadvertently calls it home equity loan.
4. Read and understand the terms of any agreement before signing it. Most people regret signing documents with hidden deals. For instance, you signed a “no money down” deal to purchase a new furniture set. You might be surprised that your creditor collects interest payments that emanate from the first day of the purchase.
There are other causes of personal finance difficulties but these four are the most frequent causes. No matter how difficult it can be, avoid getting into the mess of a personal finance difficulties by understanding and avoiding their causes.