The average debt per household is $132,529.
And, what’s really scary is that 1 out of every 11 Americans who has credit card debt feels like they’ll never be completely debt-free.
While there are a lot of things you can do to get out of debt, the best thing to do is to never get into debt in the first place.
In order to do this, you should follow certain finance rules.
Check out this guide to learn about the top personal finance rules that will change your life.
1. Have an Emergency Fund
First things first, you need to make sure you have an emergency fund.
Sadly, most Americans don’t have a spare few hundred dollars to cover an unexpected expense. This leads many people to borrow money or to sell something valuable.
Some people end up having to take out loans with high-interest rates to cover this emergency expense, which in turn causes them to fall into a cycle of debt.
To make sure that this never happens to you, you should always have an emergency fund with three to 9 months worth of living expenses in your account.
2. Have a Budget
A new outfit here and a cup of coffee there may not seem like a big deal, but all these extra expenses can quickly add up.
To make sure that you’re not living above your means, you need to have a budget.
Not only should your budget keep you from overspending, but it should also help you reach your financial goals (such as retiring, buying a house, etc).
In order to create a budget, start by tracking your spending for a few months. This way, you can see where all of your money is going. Once you get to know where your money is going, you can better prioritize your spending habits and create concrete budget goals for each month.
3. Maintain a Solid Credit Score
The importance of a good credit score cannot be overstated. With a good credit score, you’ll be able to get a lower mortgage rate, which can end up saving you tens of thousands of dollars.
A better credit score will also help you get approved for the best credit cards- ones that come with low-interest rates, great benefits, and great terms.
In order to keep your credit score high, pay off your balances each month and don’t max out your limits.
In order to make sure you pay your balances each month, you may want to consider selling some stuff. You can check out this “donate junk car, donate your car for cash, donate my junk car” site to learn about donating your car for a tax write off to help you save money.
4. Get Professional Help
Figuring out your finances can be incredibly complicated and confusing, which is why hiring a financial advisor is usually a sound decision.
While hiring a financial advisor does cost money, it’s an excellent investment. A financial advisor can help you plan for retirement, manage your investments, and keep your budgeting on track.
Are You Ready to Follow These Personal Finance Rules?
By following these personal finance rules, money will become less and less of a source of stress in your life.
If you liked reading about these personal finance rules, be sure to check back in with our blog for more money management tips.