As a 21 years old, it is pathetic that most of us know nothing much about personal finance. An important subject that never taught in school and admit it, our parents hardly has good knowledge with money issue either.
We live in a world of debts. Some of us are even slave to the money. When we are at college, we would ask around how much the seniors make when they graduated. When we are at workplace we constantly look for a job with nice paycheck and compare with our fellow peers. We evaluate quality with the price tags as reference. Expensive=Better is the universal equation that overwrites the law of gravity. We buy big houses and cars that actually owned by banks and usually for the first year we are just paying interest. We are more worry with Carrefour or Giant are selling toilet paper 20 cents cheaper yet we don’t care how money is lost through bad interest rate or silly overdraft fees that could generates bank thousand of dollars per month.
Debts is the consequence of knowing nothing about money. Many of us will eventually abuse our credit card when we start working. We will probably pay minimum amount every month just to get something we really like. It is spending the money of the future. But when a credit card is used wisely, it actually saves you money.
1. Paying off your credit card balance every month charges you no interest. For this reason alone, credit card could replace cash easily. Seriously I would rather lost my credit card rather than few hundred bucks. Lost card can be suspended by just calling the respective bank but lost cash are lost for good.
2. Maintain a good history with your bank earns you better deal in the future. Build your reputation with your bank. Pay off every month. In case you couldn’t pay it off, clear it asap. Well you clear your debt promptly, you have a great profile. By the time you need a mortgage, your bank would offer you lower interest rate and that in the long run saves you tons of money.
3. Credit card statement is a good way to track your spending. Know where you spend and learn your money spending habit. Try to cut off 10% of your total spending next month. You will be amazed with how much you saved. By then probably it is a good time to buy me a dinner.
