3 keys to personal finance
If you want to be financially stable and sound, there are three things you have to do. Knowing the keys to great personal finance, of budgeting, managing your money, and achieving your financial goals of wealth and security.
Spend less than you earn: Save money.
The first key to personal financial success is to spend less than you earn. This is a basic principle, but one of the ones people struggle with the most. If you want to ever get well off, you have to save some money. So, start by making up a plan to spend less than you bring in. Write down all of your expenditures and obligations, and then balance that out against your income. Create a great budget and save first. If you are spending more than you are making, it is time to make a pretty major adjustment. Otherwise you will never have money to save, and without money to save, you can't get the next two keys down.
Make the money you have work for you: Invest it.
The next key to personal finance is to make the money you save with the first key work for you and earn you more money. If you do this, your financial security will be far closer than if you don't. So, you have to save money, and then take the money you have saved, and invest it. Then, your money will earn money for you, and you can sit back and just manage it. Of course you want to make sure you choose your investments wisely. Look for investments that offer you a high rate of return along with a low risk factor. This is your money that you are putting at risk, and you wouldn't want to ruin it by making an investment that is risky.
Have an emergency fund: Protect your money
The third key to personal finance is to protect the money you save and the money you earn through investments by putting together an emergency fund. If you save and earn money, but don't plan for the future and for emergencies, you might have trouble. If you want to protect your money, don't just invest wisely, also make sure that you are putting some money aside into an emergency fund so that if you have injury, illness, or accident, you do not end up in debt up to your eyes, or in some sort of financial ruin.
If you can really focus on these three keys to personal finance, you will find yourself in a far better financial position. Of course there are other things you can do to make sure you make these three things easier, like setting up a budget, and taking your savings out prior to spending other money, etc. but in general, these are the three most important things you can do.