In an era where almost everything is controlled by money it’s key that we all familiarize ourselves with financial prudence.
Financial prudence is being careful as to how you spend your money as well as being thrifty so as to save and reap high returns from investment. In accounting, there is the prudence concept which states that liabilities , losses, and expenses should never be understated. The revenues, profits and assets as well should not be overestimated.
Thus financial prudence is basically, living within own income, saving and paying of bills in time. In order to be accustomed to being financial prudent, you should consider:
-Creating a monthly budget- you can do this by dividing your income on what you want to save, how much you want to use for your day to day and how much you want to invest. All these can be done in a nutshell by using apps such as Mint Mint, PocketGuard and many others which can sync up your bank accounts and help to automatically record budgeting expenses and income.
-Long-term planning: Make a list of long-term financial goals and make a plan to achieve them. Maintain a budget and set aside a specific amount to meet your financial objectives. Long-term planning should start now. You’ll have to work hard to achieve your objectives and save and spend wisely. Other tips from HeroFinCorp. are,
-Make purchasing decisions based on the VALUE you receive: Whether you’re looking to buy a house, a car, or a motorcycle, you should base your decision on the value you receive for the item during its whole existence. It’s best to figure out how much you’re willing to spend on a purchase and then hunt for solutions that fit within that budget. Consider the residual value of a property when considering a purchase.
-The key secret to saving is an automated monthly transfer to a specialized savings/ backup account. Set aside a specific amount and set up an automated transfer to help you save for a big purchase, a vacation, or just retirement. This is the first step toward compulsory saving as soon as you start earning money. When you have an emergency or a financial setback, a contingency account comes in handy.
-Avoiding impulse purchases: Avoid making rash purchases and attempt to limit your excessive habits as much as possible. Compare and contrast products from other stores to see what they have to offer. Also, don’t believe that buying in bulk will save you money. You can be enticed by numerous deals from different supermarkets that encourage you to buy in bulk. Impulsive purchases will leave you regretting your decision. -Take advantage of festive offers/ seasonal discounts: When purchasing daily necessities or for big buys, the ideal thing is to wait for festive offers and make the most of them. Festival offers usually help you purchase at a cheaper rate. You can make the most of your purchase and save from the budgeted amount as well. Scout through different shops or online shopping websites to find the best deals and offers available for your purchase. It is ideal to wait for an offer than to make an impulsive purchase.
-Undertake periodic maintenance to avoid higher bills a later stage: What you neglect now, will ask for your attention at a later stage. If you neglect now, it will pile up and hit you harder at a later stage. Periodic maintenance should be taken care of on time. This will save you from a large amount of spending in a couple of years. You can as well decide to adopt philosophies such as minimalism to help you in your financial management process. Minimalism is about letting go of life’s excess in order to focus on what matters most so as to attain happiness, contentment, and freedom. Who doesn’t want that?!