- The connection with your inner peace
There is an established connection between sound financial health and the positive psychological health of a person. it is always a great and liberating feeling to be able to spend your own money without having o think whether you can afford it in the first place or to buy a certain thing and then fret on the after effects of calculating and repaying the debts.
Psychologists firmly believe that a person who earns little but saves money, albeit even little enjoys more peace of mind that somebody who earns a lot but does not save at all. There are cases galore of people who have fantastic stories to tell of how they managed to crawl out of the web of perennial debt that they were trapped in and how they are a happy lot to have escaped the vicious claws of any more debt. These stories have one main undertone and that is the kind of behavioral changes that being debt free can bring about.
So, if you think you are in a vicious circle of debt and repayment, we highly recommend that you go through the below list of nuggets on financial knowledge. It will do well not only to your bank balance but also to your weary nerves.
- Do you tend to forget your financial commitments?
If you are someone who tends to forget commitments, social and financial, we recommend that you create a financial calendar for yourself in the same way that you mark your special days like birthdays and anniversaries. On a financial calendar, mark the days that you have to pay up your taxes and levies. Set a reminder at least three or four days before the due date so that it is still fresh in your memory that you have to pay up. More often than not, when you miss important financial deadlines, you tend to pay penalties or late fee which is an extra expenditure that you can very well do without.
- Focus on the interest rates that you are paying
There is a thumb rule that you need to follow when you are accepting loans and also repaying them. That is, of course, the rate of interest that you are paying on your borrowings. So, make sure that you are very clear on the amount of interest that you are paying when you need to repay. The rule is that you pay the debt with the highest interest rates first and make sure that you also opt for such saving account schemes which can pay you higher interest rates than others.
- Have a clear picture of your net worth
For the uninitiated, your net worth is the difference between your assets in hands and the liabilities that you have accumulated. Healthy net worth means that there is nothing much to be worried about in the short term at least. But if your net worth is in the negative, it is time for you to get your act together and try to come around as soon as possible.
- You will need to become a budget pro
Do you remember your days as a student when you use to write down every little expense to map all your cumulative expense for the month and then set aside a sum for your miscellaneous expense? When you outgrow your student days and start working, that approach can still work wonders. Becoming a budgeting pro can yield a lot of benefits. For one it can put your financial position in the right perspective and allow you to spend money on most necessaries and some luxuries without feeling the pinch.
- Let the plastic money go out of fashion
This is really established with the help of various experiments by psychologists that when people use cash in contrast to buying their stuff on their card, they are more careful of overspending. It is obvious that when you have to flash your credit card, you do not have to worry about the limit of your purchase and at least not immediately. But when you have to go for all cash, you will try to prioritize your purchases and never end up being in debt.