Understanding Personal Finance

Given the state of the economy currently, it is wise to be well aware of the current state of your finances in order to plan effectively for the future should difficult situations arise. Today, a common practice for acquiring necessities is the use of credit. As a bankruptcy attorney, I always strive to keep my clients informed. The purpose of this blog is to point out some common tips for staying fiscally secure and remaining smart about personal finance.

  1. Utilize a budget. This tip seems simple and common but it is greatly under appreciated. Budgets allow for structuring your finances and if done correctly, can even leave room for some extra spending here and there. Be wary of spending sprees however as they can leave you financially high and dry. Budgets with monthly allowances will help you track exactly where your money goes each month and will allow you to make adjustments as needed. A good budget can always be improved to better suite your ever-changing needs.
  2. Maintain good records of your credit cards. If you are having a difficult time managing several different credit accounts, it may be wise to move to a fewer number of credit cards. Furthermore, being well-informed about each card is essential; every card has different rates, restrictions and limits, a danger of credit cards is not knowing how they operate.
  3. Invest. Simply put, early investing more than likely leads to more capital during retirement. This holds true even if you are working a job with an hourly wage instead of a salary – putting away small amounts of capital for a long period of time will greatly benefit your future financial status.
  4. Be wary of minor expenses. Think about your daily routine. Do you buy a bottle of water each day instead of refilling? Small purchases here and there can really add up. Let´s say in your daily routine you purchase a bottle of water every day at lunchtime for $1.00 (which is a seriously low price for a bottle of water nowadays). That could add up to $365.00 of bottle water a year, $365.00 that could´ve been invested in your future. Try making your habitual spending routine fall into the category of “occasional”.
  5. Have an emergency fund. Build up a separate fund using small amounts from every paycheck to be used for unforeseen expenses. Make that money off limits of every day use so it does not become depleted. You will be happy to have this resource in case of a serious expense such as an auto-repair or medical bills; this will allow you to avoid relying on credit to get your through tough times.

These tips can help you stay afloat even in tough financial times. However, even the most fiscally responsible individuals can run into problems. If you become one of these individuals, Chapter 7 Bankruptcy may be able to help you get on track. During the Chapter 7 process, your monthly budget is evaluated and an attorney may be able to suggest budgeting advice. Patel Law Firm strives to not only help its clients through bankruptcy, but to prepare to maintain a reasonable budget in the future. Contact us for a free evaluation of your finances.

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