Credit cards shouldn’t scare you.
Rule 1: Buying is better than renting
In some cases, sure but buying isn’t better than renting in all cases. While buying a home seems like a pretty great idea, you also need a large amount of money handy for the down payment, which in some cases can cost as much as a whopping 20 percent of the total cost (for instance, if your future dream pad costs $100,000, then you’d need $20,000 right away). Spending all your hard earned money in one go can spell disaster later on, when, say, you need to get your vehicle repaired.
It’s also been found that renting a place is 37 percent cheaper than owning it – of course, over a period of time. Your savings probably won’t kick in unless you don’t budge for a period of about seven years. And, if you’re a city hopper, stick to leasing.
Rule 2: Credit Cards are Pure Evil
No. This little piece of plastic can go a long way and help you establish a kickass credit score, something you’ll desperately need when you want to buy a house, or a vehicle, etc. When you ignore the credit card sellers, you’re ruining your reputation and shooting signals of a person who’d be unable to pay back. Start small if you are worried about sinking into debt by keeping a minimum balance and using your card a couple of times a year to build up a positive charge history. It’s smarter to pick a card that has no annual fees and has more rewards only if you can pay back all the balance by the end of every month.
Rule 3: You must have an emergency saving fund that can last for 6 months
Umm, that’s… a little unnecessary. You’d be relieved to know that this unrealistic goal is only achieved by 28 percent of Americans. Instead, start with a more realistic goal of saving small. Save 5 percent of your paycheck or $50 every month, whichever is more convenient, into an online savings account until you have enough to get you by for a month.
Rule 4: You’re broke because of your ridiculously expensive latte
Continue sipping your fancy latte even if your $3 morning habit adds up to almost about $1100…because depriving yourself of small pleasures will only lead to diverting from bigger saving goals. If you want to spend money on a binge, only then stick to saving every penny. Instead of focusing all your energy on cost-cutting, channelize it on figuring out ways you can increase your overall earnings, whether it’s working a few hours extra or turning your passion into a thriving business.