Finance is a broad topic, that can range anywhere from saving to credit cards. This can make it overwhelming when trying to figure out what is important and what may be just a ploy. But don’t get too worked up.
Here are our top 5 finance facts that everyone should know about.
- Saving
People often mistake saving and investing for the same thing. 39% of all American families will not have $400 to pay off for an emergency. The goal should be to start saving for emergencies first, before investing in anything else.
The general rule of thumb is to have enough saved to cover 6 months of living expenses before jumping straight into investing.
- Budgeting
Budgeting is considered an unnecessary task, and people will often prefer to wing it. But budgeting is a great way to understand how much money you are wasting on wants, rather than needs.
We’re talking more along the lines of spending an extra $10 dollars on delivery fee’s from your favorite restaurant, rather than just going to pick it up. These wants can bring us happiness, but be smart about how you go after them.
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- Investing
Investing is daunting. The thought of possibly losing money is scary for many individuals and will lead them to not invest their money until it is considered too late. This is why investing is considered one of the most important money tips.
What people don’t realize is that there are different routes to investing that can still produce enough results. There are 401(k)s, IRA’s, mutual fund accounts, bonds, and the list goes on. Each has its own benefit and multiple routes are the best option.
- Credit Cards
Credit cards are often looked at as extra money, rather than as loans. This is why credit card debt is at around $930 billion at the end of 2019. People often spend outside their means on credit cards and lead to a cycle where they are only paying off interest rather than the balance.
Keep credit card spending down, and only look to spend around 35% of available credit at any given time. If you go above that, make sure to pay it off within 6 months.
- Inflation
People also don’t realize that the cost of living and inflation also play into how much money you are making and saving. The inflation rate can vary anywhere from 0.7 percent to 3 percent in any given year. Inflation is one of the facts about money that can’t be ignored.
You should be making more than the rate of inflation everywhere to keep up with your current salary and income. The goal is to get ahead of that, so you can increase your wealth.
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These Finance Facts Can Help Change Your Life
Keeping up with these finance facts can make all the difference come later in life. Retirement comes quickly, so be on top of your finances and make sure you are budgeting and saving to live out the rest of your life comfortably.
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