What does it take to be financially mature? This is a question that everybody finds themselves asking sooner or later in their lives. After all, managing your finances responsibly is rightfully considered to be a key to financial success and stability.
Thankfully, none of the things that comprise financial maturity are rocket science. Every principle listed below is based, first of all, on common sense and logic. Still, as obvious as some of these points might seem, it is often crucial to have them phrased in a concise manner to help accentuate their importance. So what are these key rules?
#1 Budgeting regularly
First of all, know where to spend your money. What this means is figure out what you need and what you don’t. Make a list of things that are absolutely crucial to you and then think about the things that you have bought in the past but could actually live without. While doing this exercise, keep in mind that you need to treat not only your physical day-to-day needs, but mental ones as well.
With that figured out, know where you can spend less. Learn if there are any cheaper alternatives to your usual shopping venues. Even if the price differences are minimal, your monthly expense calculations will show you just how much of a change they could make.
#2 Adding to your savings
You’ve got to think long-term: $10 a week sounds like nothing. But in 10 years? That’s $5200. Figure out what you can save each week or each month. The sum doesn’t have to be crippling. Small savings add up, and you will be surprised just how much you’ve saved after only a few months of doing this.
It is important to stick up with this practice, though. If you absolutely cannot make your planned savings for some particular week/month, just put away as much you can, but only in extreme cases. Consistency is key!
#3 Managing debt
Debt can build up you credit if handled responsibly. Many associate debt with unwieldy monthly payments and declining credit-worthiness. But if you plan responsibly and don’t take on more credits than is financially sane, paying off your debt will make you look like a responsible adult in the eyes of banks and future employers. This is not a simple matter to be trifled with.
Americans die with an average debt of $62.000. The sooner you prepare for a debt-free retirement, the better. Start doing it even before you take out a credit. It’s impossible to prepare for every emergency in life, but do your best to predict what you would be able to pay back every month without living in poverty. Consult your financial advisor if necessary.
#4 Life & health insurance
These should be the first priority in your budget, not an afterthought. Prepare for the inevitable and make sure you’re protected. Learn about any genetic illnesses you might have and read about the statistical averages of deceases and infections in your city and neighborhood. Ask your family doctor and know your health limits.
How often do you get sick? Do you need to take prescribed drugs constantly? Take into account all these points and calculate how much you would need to keep yourself healthy, even in case of emergencies.
After all, financial maturity is all about looking ahead. Planning is the key to staying ahead of debt and any difficulties that life may throw your way.