Do you know whether or not you are living within your means so that you are on the right track of building a good financial future? Here are a set of 5 questions which will help you determine whether you are living within your means or you are way beyond.
- Are you able to save more than 10% of your monthly income?Ask yourself, whether or not you're able to save at least 10% of your monthly income. If not, then you're not a responsible person. You should plan a budget and try to save at least 10% of your income right from the next month. It will help you overcome financial emergencies and take care of the rainy days.
- Have you been able to reduce your credit card balance?Each one of us experiences a high credit card balance at some point or another. But the question is, are you able to reduce it over the next few months? For example, are you carrying the same credit card balance for about one year of time? If yes, then choose a debt relief option and try to make more than minimum payments on the card(s) with high balance.
- Do you use one credit card to repay the bill of another?If you do not use one credit card to repay the bill on another card, then you're on the right track. However, if you have this practice, it's high time you change it. Try to repay the outstanding balance so that you don't have to opt for balance transfer again. If required, take out a zero or low interest card and repay the balance within the expiry of the due date.
- Is less than one week's salary sufficient to make your mortgage payment?You should analyze this before taking out a mortgage loan. Do not opt for a mortgage loan, where you need to make a monthly payment which is more than your one week's salary. If you've making more than one week's payment on your mortgage, then curtail your other expenses or if possible, opt for loan modification so that you can stay current on your home loan without any difficulty.
- Do you have at least six months' salary saved for the rainy days?Everyone should save for the rainy days and saving at least six months' salary is an excellent move towards having a good financial life. If you have at least 3 months' salary, then it can be considered to be reasonable; however, try to have at least six months' salary as your cash reserve.
Last but not the least, ask yourself whether or not you ask yourself 2 times before buying an item, especially a high-priced one. If âYes', then you're on the right track; but if you answer âNo', then be careful, otherwise you may soon land into big trouble. Always ask yourself whether or not you really need the item and whether it makes sense to buy it at that time. And, before buying an expensive item, it would be great to save money and then purchase that item. If you still feel the urge to buy that item even after a few months, then you can consider purchasing it. Just following these rules will help you enjoy life without having to worry about the future of your financial life.