What does financial responsibility mean to you? To be financially responsible is to manage your finances and assets in a way that is in the best interest of yourself, your family, or company. In a world where it’s getting easier and easier to spend money, it is even harder to be financially responsible. Here I have outlined five simple but essential tips that should help you accomplish this.
1. Saving for the Future
Saving is a great and responsible way to use your money. Instead of spending every dime you have, you should save some of the money you make for the future. A good way to save is by putting a certain percentage of every paycheck (such as 10%) into a savings account.
2. Have an Emergency Fund
Another way to be responsible with your money is to create an emergency fund. If you are unable to miss a single paycheck without repercussions, then you should start an emergency fund. By doing this, you are preparing for the future and any problems that come with it. Most experts agree that your emergency fund should be able to support all of your bills for as long as six months.
Another simple way to create financial stability is by budgeting. When budgeting, you track your expenses to understand where the money you make is going. Through this technique, you can more easily prevent overspending. Also, if you ever spend too much money in one month, you can look back at the budget and make decisions accordingly.
4. Using Credit Cards Correctly (credit.com)
You can also be financially responsible by using your credit cards correctly. Try to avoid maxing out your credit card and make all of your payments on time. This will ensure that your credit score doesn’t drop, which will protect you from higher interest rates on future credit.
5. Don’t Spend Unnecessarily
Avoiding unnecessary spending is a great way to be financially responsible. Instead of focusing on buying the latest technology and other unnecessary items, spend your money on things you and your family need. In other words, don’t try to keep up with the Joneses.
For more information on how to be financially responsible, please listen to episode 13 of The Big Idea Box podcast- Millennial Financial Responsibility