It might seem contradictory if you hear that you can break certain money rules which you have been learning from childhood. No, this doesn’t mean that those rules are wrong or you don’t have to follow them anymore; just that you might feel the need to amend them from time to time for your own financial gain. Go through this article to know which money rules you are allowed to break and which you shouldn’t, no matter what comes your way.
Rules you can break at times
Here are 3 situations wherein you can think of breaking your money rules in order to attain a bigger monetary goal.
- Saving 10% of your income is mandatory – It is a common notion that you should always try to save at least worth six months’ of your living expense. Financial experts say that you should save at least $1 per $10 you earn, or in other words, 10% of your monthly income. However, you should also start contributing towards your retirement account when you are in your early 30’s; otherwise you’ll never be able to accumulate the required amount. Therefore, you can save less in order to contribute the required amount into your retirement fund.
- You should build emergency fund and repay debt – Paying off debt and building an emergency fund is really important. However, if you have low-rate debt, then perhaps contributing towards your company’s retirement plan is a wise decision; since, then you’ll also receive full company match. But, this doesn’t mean that you will pile on debt. You should also repay the debt and build an emergency fund though it may take a few more months to pay off the debt completely.
- Buying house not more than 2.5 times of annual income – It is usually a guideline to follow that you shouldn’t buy a property which is more than 2.5 times of your annual income. However, what actually matters is whether or not you can afford the monthly mortgage payment along with the associated costs of buying the property. Also, you should consider how long you plan to live in the house. If it is only for a few years, then renting a house is perhaps a better decision.
Rules you should not break anytime
Here are 2 money rules which you should not break anytime.
- Be financially disciplined – You need to be disciplined enough in order to attain your financial goals and aspirations. You should save the desired amount every month and try to not incur much debt. Along with it, you should check your credit reports at regular intervals to check whether or not there is any inaccuracy in your reports. This will help you have a good score, which in turn, will help you take out loans at suitable terms and conditions.
- Understand your financial goals – You need to figure out where exactly you want to see yourself 5 years or 10 years from now; that is, you need to set your financial goals. According to that, you can plan your actions to attain your financial success. You can plan your monthly budget in order to save the required amount. Planning an annual budget is also important since a bigger picture will help you plan your financial moves and on the basis of that, you can plan what you need to do monthly in order to make your annual budget successful.
Above all, you should maintain a positive attitude as long as money matter is concerned. Though a positive attitude is important in every walk of life; however, it is really important in the financial life. It is quite natural that there would be ups and downs monetarily but you need to maintain a positive attitude towards building a better financial future.