Money is the object that gives us the freedom to do what we want. Everything costs money, but a lot of people have the wrong mindset about it. It’s still a taboo topic in plenty of households, which is detrimental to young adults that are entering the workforce.
If you’ve been taught that money is a bad thing ever since you were little, the chances are that you’re still going to think of it like that decades later. However, dollars are just a tool that helps you do specific things. If you have a lot of them, you can become your own boss, travel the world, eat healthy and organic food, get a new phone, move into a better place, or help other people that are in need of it.
With great planning, discipline, and investing, you can also retire early and stop worrying about paychecks, deadlines, and meetings. The earlier you start to learn about personal finance, loans, taxes, and all things related to money, the faster you can set yourself up for success and relax in an exotic location with a cocktail on the table while you’re posting a picture on Instagram. Click here to read more.
Managing and understanding money
Having a long-term view of your finances is the best way to see the bigger picture. Let’s say that you’re living paycheck to paycheck, and you have a couple of loans under your name. This includes student loans, a mortgage, and a personal loan that you took out to get a used car.
Usually, in this scenario, 50 percent of your paycheck will go towards paying off all of the loans, and 40 percent will go for living expenses. That leaves you with 10 percent of your pay to enjoy life. The days might seem long, and the thought of that might be worrying you because you have a lot of financial burdens.
But when you zoom out a little bit, your entire worldview can shift. Let’s say that it takes you five years to repay all of those loans. At the date when that happens, you’re going to have a house in your name, a car, and a college degree that’s completely paid off. Follow this link for more info https://www.foxbusiness.com/personal-finance/cash-in-refinance.
Plus, you’ll get that 50 percent bonus each month that was holding you back for such a long while. In the meantime, your property appreciated in value, and it’s now worth more than you paid for it. Then, life is probably going to feel pretty good, right?
Managing your finances doesn’t involve a lot of math, and it’s not complicated. There are not a lot of formulas, and there are online calculators that can tell you pretty much anything. However, you need to set up some actionable steps if you want to turn around your entire financial situation.
First of all, that can be done by analyzing your current relationship with money and whether you have a couple of hang-ups. Writing these factors on paper is going to open your eyes to the next steps you can take.
What can you do?
Let’s look at the example that we used above. That involved having three loans and repaying each one of them individually. Even though all of those loans were used for great purposes, there’s a way to make them work out even better for you. Using a process called refinancing, you can bundle all of those payments in a single monthly payment and pay a lower rate overall.
That could save you a lot of money in the long run. A lower rate could increase your spending budget to 15 percent per month, and if you have a paycheck of 3000 dollars, instead of having 300 bucks to spend each month, you could have 450. That could be three extra nights out with your friends, dinners, or clothes that you can buy. It’s all about balance.
How does refinancing work?
Banks are pretty competitive financial institutions. They make all of their money by lending out what they already have and, in some cases, a bit more. That’s done through fractional reserve banking, which is how new money enters the system. In any case, lending institutions profit when you pay them interest.
Since there are so many banks in existence, some of them can offer lower interest compared to others. Going to refinansiering av kredittkort will give you more info. You’re not obliged to do all of your business in a single bank, so you can use multiple accounts for different things.
However, it would be much easier if you decided to pay for everything in a single place. Refinancing is a process where a lending institution such as a bank or credit union gives you money to repay all of your existing loans, and you combine those payments into a single monthly rate, usually with lower interest and a shorter or longer period.
How would that help you?
Let’s say that paying your monthly loan rates costs you 1500 dollars, and you make 3000 dollars each month. After doing great work, your boss decides to promote you and give you a raise of 500 dollars. Now, you have extra money to spend, but you can also use it to repay everything faster.
Going to the bank for a refinance can decrease the time it takes you to own a property and pay off your college degree. Your new rate can be 2000 dollars, but you’ll pay off all of the loans in 3 years instead of five. Plus, your credit score will be increased since you’ll be paying on time each time, which makes you a responsible citizen.
Why don’t a lot of people know about this?
Most people get freaked out when someone starts talking about money, which leaves you with two choices. You can either let it define and control your life, or you can turn the tables around and take matters into your own hands.
Taking charge of your finances takes time and understanding of concepts that aren’t taught in school. There are principles to follow, and you must pay attention to your present choices and how they affect your future. Creating a budget, living below your means, having a good credit score, managing your loans, knowing how to pick financial products, and understanding the premise of money will help you retire earlier.
Not only that, but it will also help you achieve financial freedom. Of course, it never hurts to go and talk to a financial advisor about all of the steps you’re planning to take. That’s one of the best ways to look at your cash flow, as well as the long-term picture of your financial future.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin