Money advice you shouldn’t ignore

There are some fundamental financial principles that you should not overlook (Shutterstock)

There is so much personal finance advice out there and truth is, it gets quite overwhelming at some point trying adhere to all of them. Nonetheless, there are some fundamental financial principles that you should not overlook as they help you adopt good financial habits.

To help out, we have a list of some of the important, yet basic, words of wisdom that if you ignore, could end up costing you big time:

• There are no shortcuts

If someone says they can help you double your money in no time without a risk, tell them you already know how and take your money, put in your wallet and walk away.

There is a correlation between risk and reward: high returns in a short period equates to more risks and higher chances of losing your money.

Well, it is not bad to take appropriate risks but don’t buy into investments with unrealistic promises as they’ll sure leave you disappointed.

• Save money and make it intentional

You need to regularly save, be it to your emergency fund or for your pension, as there’s no better way of achieving good financial health.

While at it, remember to also save all those extra cash you budget for but ended up not using. Saving every little amount you can get does not only help you avoid spending on unnecessary things but it also gives you a psychological boost as you see your savings growing.

• Don’t wait to pay off all your debt to start saving

On paper, it feels right to withhold the savings until you have cleared off all your debts. Think about it - what will you do if your car breaks down and you don’t have anything in your bank account to repair it? Without a doubt, you’ll be getting into another debt.

Have some money set aside for emergencies so that you don’t end up ruining your progress paying your debts by ending up with another debt.

There is a correlation between risk and reward (Shutterstock)

• Automate your finances

We tend to get almost too busy to remember everything. Before you know it, the month is almost over and that bill was due two weeks ago!

If possible, schedule payments on your bills so that you don’t end up incurring unnecessary penalties. You can consider planning out your monthly bills in advance and take advantage of free bills payments offered by banks.

Also, automate your savings so that you never find yourself weighing whether or not you really need to save this amount or that amount or wait or next month to save altogether.

Tip: Even if you have your payments automatically scheduled, ensure you review your accounts from time to time so that you know your spending and don’t risk getting numb and letting your spending get out of hand.

• Don’t deprive yourself

It is common to find yourself getting immersed in doing all the right and disciplined things with your money that you end up forgetting yourself. Try and let loose and have a little fun sometimes.

When you become too strict with your spending you end up feeling deprived and this can in turn result in spending binges. Think of it like starvation diets; when you cheat, you tend to cheat very big.

• Life insurance

If you don’t have one, you should consider getting a life insurance policy. You don’t have to go for something big that will only add strain to your budget. Go for a cover that is just enough to provide for your loved ones in case something happens.

Remember, you need to get the policy now. The longer you wait the more expensive it gets.

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