4 Common Sense Financial Tips To Make Your Money Work For You
Good personal finance skills are important in life, but this seemingly simple concept can be difficult to master. Without having a good grasp of how to manage your money effectively, you run the risk of making financial mistakes that could significantly impact your life.
Avoid money traps and manage your finances better with the following common sense financial tips.
1. Not all ‘tax effective’ investments are good investments.
The term ‘tax effective’ is used loosely and sometimes, such investments grow so poorly that the benefits of the tax deduction may not make up for the downsides. So when choosing where to invest your money, it is important to not automatically go for what is claimed as ‘tax effective’, but rather choose an asset that is likely to appreciate over time.
2. Don’t buy a property or asset until you’ve crunched the numbers and understood them.
Before buying a property or other assets, it pays to look at the finer details. Make sure you or have studied the numbers and are confident in the benefits for your individual situation. There are a range of online calculators you can use, these tools are only useful if you know what to put into it.
A better approach is to work with a dedicated financial advisor who will take the time to understand your unique situation and guide you on your investments or how you can make money. Chat to us if you have any questions.
3. Disposable income and financial competency are two different things.
Earning a high salary is not the same as having good financial practices. In some cases, people earn so much that they don’t realise the impacts of their terrible financial habits.
So take the time to look at your financial habits and see if there are areas where you can improve. A financial advisor can also help you adopt productive habits and spend your money more wisely. Plus there are many apps and online tools available designed to help you stay on top of your finances and become better at handling your money.
4. Make sure you have the cash flow to sustain an investment before you push through with it.
If you can’t afford the principal and interest in a property you are planning to acquire with your current financial position and cash flow, you might want to reconsider the purchase. When you run the numbers, make sure that you consider both the principal and the interest. Pushing through with an investment you can’t afford is not only high risk, but can also cause you a lot of stress in the long run.