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Everyone’s financial situation and budgeting needs are different. However, there are some basic rule’s of thumb that apply to virtually everyone’s financial situation. The tips listed below are valuable for anyone trying to become more financially stable:

1.) Put 20% Down on Any Vehicle

When buying a new vehicle, be sure to put down at least 20% up front. Also, it’s important to spend no more than 10% of your income (gross) on your transportation, and don’t finance a vehicle for more than four years. This simple tip prevents you from buying more car than you can comfortably afford and ensures that no vehicle you buy puts an excessive strain on your monthly income.

2.) Student Loan Guidelines

Unfortunately, in today’s society, where getting a college education is getting more and more expensive, student loans are often a necessary evil. However, don’t go into unlimited debt just because it’s “for your education.” In general, it’s important to not take out more on your student loan than you will likely make during your first year on the job. Sure, this rule can be difficult to follow and sometimes merits bending a bit. However, it’s important to consider the long-term implications of any student debt you take on. Compare expected salary amounts for various salaries to determine the amount of debt you should consider when getting an education for these careers.

3.) Create an Emergency Fund

A good rule of thumb is to have at least six months of living expenses in savings on hand for any and all emergencies that might come up. Having this amount of money saved can prevent you from going into debt should an emergency arise. Sure, it’s difficult to amass this much in savings for many people. However, it’s important to at least try. Many financial experts recommend starting with $1,000 and then building up from there.

4.) Put Down 20% on a New Home

When contemplating the purchase of a new home, it’s important to put down at least 20%. This will ensure you don’t have to carry private mortgage insurance, which can be expensive. Having at least 20% to put down will also give you a better chance of getting approved for your home loan and will give you a guideline to follow when considering homes. You won’t be able to buy more house than you can afford if you stick with this financial rule of thumb, because coming up with 20% would be impossible if the house is outside your financial capacity.

5.) Follow The 10-Year Rule When Purchasing a Car

Everyone knows that vehicles depreciate in value the minute you drive them off the lot. Still, many people will finance a brand-new vehicle and then trade it in within three years’ time, which is financially unwise. In general, it’s important to either buy a used vehicle, to offset the depreciation factor, or buy a new vehicle and keep it for at least 10 years. This will ensure you optimize your car’s value and keep you from taking a huge hit on its depreciation.

The five tips listed above are great financial rules of thumb anyone and everyone should follow, no matter their income or financial obligations.