Even if you had certain financial habits, there are a few rules that you no longer have to follow.
Each person treats money in his own way – because of his upbringing and experience.
For example, your parents taught you to put money in a savings account every week or month. But these days, this type of investment is not highly profitable due to low rates, so people prefer to invest their money in other ways, for example, in stocks. So, even if you had certain money habits, there are a few rules that you no longer have to follow.
Here are some outdated financial tips that you should stop follow.
Get married faster: marriage solves money problems
You’ve probably heard that money problems are the root cause of many divorces, so the sooner you and your partner talk openly about money, the better.
It is very important to openly discuss finances with your future spouse if you want to find common ground and mutual respect and not go broke.
And you probably know couples who come together to save money, but this is also not a good financial decision. While this could potentially save both money, there are many other factors to consider, says Anna Colton, head of investment agency Merrill Edge.
“Before you assume that this move will save you money, have an open, honest conversation with your partner about your current finances, long-term and short-term financial goals, and how you will deal with the costs associated with the move and living as a couple.” She says.
So you will have the opportunity to find out the size of his income and other points that affect the financial condition of your couple.
You should buy a home as soon as possible, not rent
“Your dream home can quickly turn into a nightmare if you take out a mortgage before you can afford it,” says Rachel Cruz, a personal finance expert. “Instead, take your time and rent until you can make at least a 10 percent down payment.” She also advises that your payment does not exceed 25-30 percent of your total income.
There are many additional costs associated with owning a home, including utility bills, renovations, and more.
Don’t waste your money on frivolous things.
Despite the fact that you are used to staying within your personal budget, there can be large “spontaneous” purchases. These are not planned things that you don’t really need, but you really want them.
Financial experts unanimously tell us: stop frivolously spending money on things you don’t need, because that can lead to serious credit card debt.
If you go broke on such purchases too often, you will find yourself almost drowning in financial debt. However, it’s okay to heal yourself from time to time, especially when it comes to buying experiences and experiences rather than things, experts say.
Close all debts before you start saving
While you may be in so much debt that you see no point in saving money, this is an outdated financial rule, says Dustin Jacobs, vice president of marketing at BrightStar Credit Union.
“While paying off a high interest credit card should almost always be your priority. There are times when you need to prioritize savings over debt repayment, for example, creating a personal emergency fund,” the expert emphasizes.
Pay off the debt with the highest interest rate first
While it may be tempting to pay off the highest interest rate debts first, it is a “rule” not to be followed.
Instead, experts suggest using the debt snowball method.
“Jot down your debts from the smallest to the largest, regardless of interest rates,” says financial expert Rachel Cruz. “Then, pay off the smallest debt at the slightest opportunity, making the minimum payments on everything else. Once the smallest debt is paid off, transfer whatever you paid on the first debt to the next smallest debt. Then continue until you are completely free of debt.”