Understand your financial situation to be clear about your goals and opportunities.
1. How much debt do you have?
To get rid of debt faster, you need to know exactly how much you owe. And also imagine how long it will take to repay them. Without this, it will not be possible to draw up a clear payment plan, but it is necessary.
Calculate how many years and months it will take to pay off debts when you can start increasing payments. If you are in a long-term relationship, it is important to know how much debt your partner has, which also affects you.
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2. How much savings do you have?
This will help you understand how much you are spending and saving and plan your contingency fund.
If you have an amount of money on hold that will last for several months, consider transferring it to retirement savings, investments, or some other larger goal. This is especially important if you are planning a budget with your spouse.
A clear idea of how much money you have is the first step to financial independence.
3. What is your debit and credit card interest rate
Chances are, you rarely pay with cash. It is much more convenient to use a map or an app now. However, this increases the chances of spending too much and getting into debt.
Remember to keep track of your credit card balance every month. Connect SMS notification or check the balance daily in the banking application. For a good credit history, try to spend no more than 30% of your limit and pay off the debt within a month.
If you could not pay off your card debts in a month, it is important to know how much interest will be charged from you. This will make it easier to decide which debt to pay first and which card to use in unforeseen situations.
4. How much do you want to earn
Remember that money is not the most important thing. And how much you earn is influenced by many factors beyond your control. You shouldn’t devote your whole life to making money. Nevertheless, it is important to define goals and strive to achieve them.
Also read: How to Save Money Fast as a Student
Knowing the required amount makes it easier to make career decisions.
Think about what you are working for if you need to earn and save a certain amount of money for the sake of financial independence. Then you can retire early or start your own business. If you work to support your family, your salary should meet all your family needs.
Determine the amount to which you will strive, but do not drive yourself into too tight limits. It’s okay if you haven’t earned your ideal amount accurate to the ruble by a certain number. There are always factors beyond your control.
Adapted and translated by The Cop Cart Staff
Sources: Life hacker