• Main Menu
    • Home Page
    • Secure Area
    • File a Claim
    • Make a Payment
    • Refer a Friend
    • Join our Newsletter
    • Important Links
    • Insurance Glossary
    • View our Blog
    • Location(s)
    • Employee Directory
    • Contact Us
    • Extra Page 1
    • About Us
    • Privacy Policy
  • Automobile
    • Automobile Insurance Home
    • Auto Insurance Quote
    • Request ID Card for Auto Policy
    • Request Declaration and Coverages Page for Auto Policy
    • Send Declaration and Coverages Information to Lien Holder
    • Add Vehicle to Existing Auto Policy
    • Remove Vehicle from Existing Auto Policy
    • Add Driver to Existing Auto Policy
    • Remove Driver from Existing Auto Policy
    • Mechanical Breakdown
  • Homeowners
    • Homeowners Insurance Home
    • Homeowners Insurance Quote
    • Request Declaration and Coverages for Existing Homeowners Insurance Coverage
  • Renters
    • Renters Insurance Home
    • Renters Insurance Quote
    • Request Declaration and Coverages Page for Existing Renters Insurance Coverage
  • Motorcycle
    • Motorcycle Insurance Home
    • Motorcycle Insurance Quote
    • Request ID Card for Motorcycle Policy
    • Request Declaration and Coverages Page for Motorcycle Policy
    • Add Motorcycle to Existing Policy
    • Remove Motorcycle from Existing Policy
    • Add Driver to Existing Motorcycle Policy
    • Remove Driver from Existing Motorcycle Policy
  • Business & Commercial
    • Business & Commercial Insurance Home
    • Commercial Auto Insurance Quote
    • Request ID Card for Commercial Auto Policy
    • Request Declaration and Coverages Page for Commercial Auto Policy
    • Add Vehicle to Existing Commercial Auto Policy
    • Remove Vehicle from Existing Commercial Auto Policy
    • Add Driver to Existing Commercial Auto Policy
    • Remove Driver from Existing Commercial Auto Policy
    • General Liability Quote Form
    • Business Owners (BOP) Quote Form
    • Workers Compensation Quote
  • Health
    • Health Insurance Home
    • Health Insurance Quote
    • Disability Insurance Quote
    • Long Term Care Insurance Quote
  • Recreational Vehicle
    • Recreational Vehicle Insurance Home
    • Recreational Vehicle Insurance Quote
    • Request ID Card for Recreational Vehicle Policy
    • Request Declaration and Coverages Page for Recreational Vehicle Policy
    • Add Recreational Vehicle to Existing Policy
    • Remove Recreational Vehicle from Existing Policy
    • Add Driver to Existing Recreational Vehicle Policy
    • Remove Driver from Existing Recreational Vehicle Policy
  • Life
    • Life Insurance Home
    • Life Insurance Quote
    • Term Life Insurance Quote
  • Earthquake
    • Earthquake Insurance Home
    • Earthquake Quote
    • Request Declaration and Coverages Page for Existing Earthquake Insurance
  • Locations
  • Video Library
    • Auto Insurance Videos
    • Homeowner's Insurance Videos
    • Mercury Insurance Videos
Auto Homeowners Umbrella Earthquake Commercial
Home > Blog > 4 Personal finance rules you should know by heart
WEDNESDAY, JANUARY 24, 2018

4 Personal finance rules you should know by heart

There are tons of personal finance tips, tricks, and rules that can greatly improvepersonal finance rules your financial well-being. However, some are more important than others. Here are four personal finance rules in particular that are extremely important to your financial health, both now and in the future.
 
 Avoid credit card debt -- in most cases

Most people realize that credit card debt is a form of "bad debt," but they carry it anyway. About 46% of U.S. households carry credit card debt, and among those that do, the average balance is $15,654, according to personal finance website NerdWallet.

A general personal finance rule is to avoid credit card debt at all costs. It's typically better to finance something with a personal loan, home equity loan, or even a 401(k) loan than it is to pay double-digit credit card interest rates.

The exception is if you have credit card debt at little or no interest and are capable of paying it off in full before a big interest rate kicks in. For example, when my wife and I bought our house, we bought our furniture using a store credit card's 60-month deferred interest offer and paid the balance off before the promotional period expired.

However, it's important to beware of how deferred interest financing offers work. If we hadn't been able to pay the entire balance within 60 months, we would have been hit with a bill for all of the interest that would have accumulated the entire time at the card's standard 29.99% rate.

Save and invest at least 10% of what you earn for retirement

One of the most common questions I get asked by friends and family is "How much should I be putting in my 401(k)?" The short answer -- 10% of your income is a good target.

For a little more color, this applies if you're saving for retirement in an IRA, 403(b), 457, Thrift Savings Plan, or any other type of retirement account. It also does not include any employer matching contributions, or any investments you make in standard (taxable) brokerage accounts. In other words, you should earmark 10% of your pre-tax compensation for your retirement savings.

This may seem like a lot, especially if you're contributing, say, 5% now. However, you don't need to get there right away. Try increasing your contribution rate by 1% per year until you get to 10%. Or try increasing your contribution rate whenever you get a raise.

And of course, even more than 10% is definitely better. It's always a smart idea to over-prepare for retirement.

Contribute to an emergency fund

It's tough to overemphasize the importance of having a retirement fund. A recent Bankrate.com report found that 61% of Americans would be unable to cover a $1,000 emergency expense from their savings.

Experts generally suggest that an ideal emergency fund has six months' worth of your living expenses in a readily accessible account, but this can be a lot of money. Don't be discouraged.

Instead, if you're one of the majority of Americans who doesn't have a big savings account, set a realistic short-term goal, like $500 or $1,000 -- something you could reasonably achieve in a year or so. My suggestion is to divide this goal by the number of times you get paid each year, and set up an automatic transfer. If you can get to $1,000, you'll already be better equipped to handle an emergency than most people.

Live below your means

Many people believe that if they don't spend more than they make, they'll end up in good financial shape. I believe in going a step further and making a conscious effort to spend less than you make, even after accounting for savings.

In other words, don't buy a more expensive car just because you can afford it if a less-expensive model suits your needs and your taste just fine. If you take home $5,000 per month and save $1,000 for retirement and unforeseen expenses, make it your goal to spend substantially less than the other $4,000.

Just a starting point

Of course, these aren't the only personal finance rules you should keep in mind, but they are certainly some of the most important ones. If you avoid credit card debt, save 10% of your income for retirement, maintain a substantial emergency fund, and live below your means, you'll be on your way to financial independence.

This article originally published on Yahoo Finance by Matthew Frankel

Posted 11:00 AM

Tags: 4 personal finance rules you should know by heart
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2010

  • 5 tips to protect your possessions with valuable items insurance coverage(3)
  • spring driving tips(3)
  • john o'leary monday motivation: would you do it again?(2)
  • preventing slips and falls in your home(2)
  • crime spikes on halloween: fictional ghost story or factual concern?(2)
  • 3 easy ways to get rid of fruit flies(2)
  • why 2 experts say you should clean your medicine cabinet — and their 5 key tips(2)
  • john o'leary monday motivation: what do you see?(2)
  • help keep your teens safe behind the wheel(2)
  • 10 best places to get a deal on glasses(2)
  • motivational monday(2)
  • things burglars look for before breaking into a home (and what keeps them away)(2)
  • grilling safety tips(2)
  • ez-prep (severe weather: emergency preparedness and response planning)(1)
  • false facts you believe about money(1)
  • motivational monday with john o'leary: how heroes are made(1)
  • home safety tips(1)
  • john o'leary monday motivation: leave it all behind(1)
  • the flu is a bad souvenir. here’s how a pilot stays healthy while flying(1)
  • are you protecting your family from harmful uv rays?(1)
  • why you might want to wrap your car key fob in foil(1)
  • 10 smartphone camera features that make you feel like a professional photographer(1)
  • life insurance misconceptions(1)
  • should you pay off your mortgage?(1)
  • 19 discounts seniors didn’t know they could get(1)
  • 10 simple & sustainable tips for a healthier you in 2019(1)
  • confessions of a car salesman(1)
  • 6 simple spring car care tips(1)
  • car cleaning tricks that your body shop won’t tell you about(1)
  • drinking coffee won't improve your metabolism — here's what actually works(1)
  • ridiculously simple and free ways to live a more sustainable lifestyle(1)
  • financial book clubs make learning about money more social(1)
  • 6 ways to secure your home when you're away(1)
  • monday motivation with john o’leary: a small act of caring(1)
  • family fire safety tips(1)
  • 9 healthy holiday-eating strategies(1)
  • monday motivation with john o'leary: will you see it?(1)
  • how times of trouble remind us to be grateful “if the only prayer you ever say in your entire life is thank you(1)
  • tips to keep your house plants happy and healthy(1)
  • small money moves to change your financial future(1)
  • john o’leary motivation: it’s not about you(1)
  • always bloated(1)
  • 15 times you should definitely be washing your hands and aren’t(1)
  • john o'leary monday motivation: redefining perfect(1)
  • john o'leary monday motivation: slow down and enjoy life(1)
  • john o'leary monday motivation: where do i belong(1)
  • what to do when you're hacked(1)
  • 20 ways to save money(1)
  • focus on safety all year long(1)
  • power outages(1)

View Mobile Version
QUICK LINKS

Home
About
Get a Quote
Contact

Refer a Friend Leave A Review
                          R.L. Thomas Insurance Service, Inc.

                              21021Ventura Blvd., Suite 215                         
                              Woodland Hills, CA  91364                    
                              Phone: (818) 380-1700                            
                              Fax: (818) 906-0667                                
             

                               License#: 0601754
Powered by Insurance Website Builder