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Tuesday, January 06, 2015

6 Easy Tips to Increase Your Financial Intelligence

by Kerry Walsh (Submit your guest post and get published here)

Venturing out into the world on your own is an exciting time. No longer are you subject to the rules of your parents or other adults whom you lived with – you are free to come and go as you please. Chances are, you’ve stayed up late and slept in. You even may have gone to buy snacks with new friends at three in the morning. Life is a little different now because you have more freedom; it also means you have more responsibilities. Finances are chief among your new concerns. If you manage your money poorly and are irresponsible with credit, life becomes very painful. Conversely, if you are smart with your finances, you can have confidence that you’ve set yourself up to succeed. Here are a few tips to maintain control of your finances - and your life.
Financial Intelligence Mind Map
Financial Intelligence (FI) Mind Map / PicCredit
1. Create a Budget

Few things will cause more financial difficulties than spending money recklessly. Creating a realistic budget based on your income will help you avoid financial pitfalls. First, identify your income. How much money do you make in a month? Next, write down your expenses (phone bill, fuel, food, etc.). Round down just to be safe.

As you look at your budget, look for items you can cut out as they relate to your spending. Instead of going to the movies every week, just go once a month. Rather than eating out frequently, put some money in an envelope that is specifically for a night on the town. Once you’ve created your budget, stick to it, and mark down your spending so you know exactly where you are when it comes to your money.

2. Save - No Matter What

Chances are you’re probably not making much money, if any, as a student. Your primary goals in life at this time are to get an education and develop skills to use when you eventually set out on your career path. If you do work, you may not log too many hours, which may make you think saving any of it is out of the question. Wrong! Save, regardless of how much money you’re bringing in. Even if you can only put away $10 each time you receive a check or stipend, your savings will add up over time and come in handy when you need it.

Identify ways that you can save more. Do you eat out frequently? Plan out your meals for the week and use a shopping list when you go to the store. Eating out is expensive and only lasts for one meal. Instead of splurging on a nice dinner, use the money you would have spent on your breakfast items for the week. You can save more money than you think this way.

3. Buy Used

There are plenty of gently used items out there available for a bargain. Instead of shopping at a department store on clothes that are brand new, consider going to a secondhand store. The same goes for household appliances or furniture. Online auctions are another way to save, especially on textbooks and other necessary school materials.

If you can’t find what you’re looking for used, try using coupons. Also, many retail stores and websites will honor competitor’s discount prices, so be on the lookout for the best possible deal for all of your purchases.

4. Use Public Transportation

If available, public transportation is one of the easiest ways to save money. Having a vehicle of your own is certainly convenient, but the expenses add up quick. If you take the bus or subway, you don’t have to worry about paying for gas, insurance, parking, or maintenance costs.

In addition to public transportation, consider riding your bike. A used bicycle can be purchased relatively cheap and it’s a great way to get exercise and travel efficiently, especially around your campus.

5. Work Odd Jobs

If you don’t have a regular job, see if you can earn some money on the weekends. Offer to do yard work for people who live nearby. If you are skilled in a certain academic area, offer your services as a tutor. Make a list of five things you think you’re good at and see if you can turn one of those into a side job that generates income.

You can make a flyer outlining services you provide and distribute it around your neighborhood and on local bulletins boards. Include your contact information so potential customers will be able to reach you. You’ll be surprised at the response you get from a carefully prepared flyer or advertisement.

6. Use Credit Responsibly

As soon as you step out the door to be on your own, you are bombarded with credit offers from banks, credit card companies, department stores, etc. While it’s true that you should make an effort to build good credit, you also need to respect credit for the powerful weapon that it is. Before opening a line of credit, ask yourself the following questions: What is the interest rate? Is there an annual fee? Are there rewards? And perhaps the most important question: Do I need this? In most instances, the answer will be no. The trick is to use credit to your advantage. If you buy groceries or fuel with a credit card, pay the balance monthly. This will establish your credit worthiness and help develop good financial habits.

If you’re unable to pay off your entire balance, try to pay more than the minimum due. Allowing your balance to build up will accrue interest and make it more difficult to pay back.

While the sole purpose of one’s life should not revolve around money, it’s important to be mindful of your finances and live life in a way that is responsible in order to provide for yourself and your current or future family. By implementing the aforementioned guidelines, you can start down the path to financial freedom and success in all areas of your life.

Kerry Walsh writes for iMoney.my. She loves reading, writing and adventure-seeking.
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