Money management seems to be the most challenging task for generation Y. Millennial grew up in a vast changed economic situation where they were highly affected by modernization. Most of them are either dying to start their own family or are crazy to move into a foreign country. Many of them aren't even aware of the fact that budgeting and frugal living can help them manage money in a much better way. However, there are certain money-savvy young people who handle finances responsibly in their day-to-day lives by following 4 practical money rules. Read on to know about these rules in details.
Rule 1 - Check your credit reports at regular intervals
Whenever you apply for a loan, lenders/creditors check your credit scores in order to determine your creditworthiness. A good score helps you in taking out a loan at favorable terms and conditions. Apart from that, an impressive credit profile also helps you in securing a good job or buying insurance policies at reasonable rates. So, never make a mistake of not checking your credit reports at regular intervals. Always check your reports for errors and dispute them, which in turn, will help you improve your score.
Rule 2 - Do homework while making investments
Do not hurry while planning for investment. Young generation often make investments without doing the necessary homework. Do not ever buy an investment product simply because someone has asked you to do it. Make sure you gather knowledge about the investment product and check whether or not it is compatible with your risk tolerance and best suits your investment portfolio.
Rule 3 - Don't over stretch your budget while making big purchases
Those who think that they can afford a big purchase (such as a car, home) simply because they can make the monthly loan payments on time are on the wrong path. Don't think that you can afford everything simply because you can manage monthly payments. The cost of maintaining a car and home is much more if you consider the necessary repair work, insurance premium, fuels and what you have to pay for its maintenance. It is also advisable that before making a large purchase, ask yourself whether or not you really need it or wait for a while when maintaining cost doesn't cost your other necessary expenses.
Rule 4 - Make more than minimum payments on credit card bills
It is a big mistake to make only minimum payments on your credit cards. When you make only the minimum monthly payments, a lot of interests get added to your total payments over the entire life of the loans. As a result, you end up paying much more. So, try to pay at least a few dollars more than the minimum amount.
Do not ever forget to keep track of your money. There are many young people who either don't keep track or maintain inadequate records of their monthly/annual income and expenditure. They don't feel the need of planning a budget in order to manage their personal finance. However, it is advisable that you plan a budget that in turn would help you in improving your financial position and attaining your short and long term monetary goals.