Managing household finances can be a daunting task, you have to constantly be on top of your game to make sure you are efficiently handling them. This includes managing your household income and expenses in such a way that you are able to make ends meet, in fact, you are able to save some money at the end of the month.
However, we may have gotten it all wrong. Here are some things we have learned about household finances that we should forget and why we should forget them.
Neglecting your credit card debt
Some people say that you shouldn’t be worried about paying for your credit cards and can delay the payments for as long as you like. Do you think that is a smart thing to do? No, it is not. The reason behind this is that your credit score will be affected negatively, which would mean that your chances of approval of a loan in the future will go down drastically. Also, some experts suggest that you shouldn’t have credit cards at all as they tempt you to spend more money than you have. However, if you are good at managing household finances, you will be able to better manage your credit card, income, and expenses. With credit cards, you can avail offers like cashback and travel points, etc.
Stick to one job
Some people are of the opinion that they should stick to one job as with time your value at the workplace will only grow. We have witnessed our previous generation serving the majority of their life to one organization. However, the millennial generation doesn’t think like this. It is better for your career to keep switching as this gives you more chances of growth. This obviously doesn’t mean that you switch your job every 5-6 months. Give two years at least, and then make another career move. This way you will make more money, and be able to better manage your household finances.
Just buy one house
Let’s say you were able to purchase a house in the 1990’s – should you stick to the same house years after? Ideally, it would be wise that you move into a newer place, so that much money isn’t spent on its maintenance. Old houses or apartments require an increase in household finances to run. Also, as the household market faces an appreciation in price, you can benefit from selling your property at a profit – which means more income left for you to spend on your next property.
It’s ok to not have emergency funds
Well, that is not ok! You should always have money saved for a rainy day. Also, some say that have at least expenses of 6 months saved for unforeseen situations that you may come across, while it is advisable to have money saved for at least a year’s total of household finances.
Being completely dependent on your social security
As an American citizen, upon retirement, you will be entitled to social security. But is it wise to be completely dependent on your social security once you retire? You should have other streams of income ready as well, so you are not only dependent on your social security. What if the money you get isn’t enough to cover your household finances? Then what will you do? As a retired person you will have fewer loan options at your disposal. Having more than one income stream is the right way forward.
Keeping cash idle and not investing
These days so many investing options are available – mutual funds, stock market, savings account and how can we forget cryptocurrency. Having money saved without investing it anywhere is not a wise choice. With time idle cash loses its value as inflation is increasing with time and the idle money hasn’t taken into account that inflation. You can hire a fund manager or talk to a friend with knowledge about investing options, so you can wisely invest your money to increase your income and to better manage your household finances and expenses.
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