4 Principles of Personal Financial Responsibility

Managing finances can feel overwhelming at times. Many factors contribute to your financial well-being and it can sometimes seem like you are spinning too many plates to track. However, there are some simple places to start that can get you going in the right direction.

Look to Causes Within Your Control

It’s important to remember that you are the one who can control your financial decisions. Take ownership of that fact. When your finances are out of control, it can be tempting to blame outside circumstances for your predicament. Even if your excuses are totally legitimate, taking ownership of your situation is still the only path to financial abundance. It’s imperative that you take an honest look at your spending habits, as compared to your earnings, and make the adjustments necessary to gain financial control.

Live Within Your Means

As unglamorous as it sounds, living within your means is a great way to reduce financial overwhelm and give yourself peace of mind. It’s about having a budget, so you can manage your finances in such a way that you are not overextended. It’s knowing where the line is between needs and wants. It’s not that you can’t ever have something you want; it’s that you plan for it and make sure it’s within your means.

Use Credit Responsibly

Credit affects more than your immediate finances. A good rule of thumb for credit is that if you can’t afford to pay for the item in full, then you can’t afford it on credit either. This is because proper utilization of credit involves paying your balance in full every month. If you can’t, then you are living beyond your means and you could negatively impact your chances of getting a loan for a car or a house later on.

Pay Yourself First

Paying yourself first means putting money aside for your goals before you pay any other expenses so that you don’t spend the money before you get a chance to put it away. Whether you use that money for something like a large purchase, savings, or an emergency fund is up to you. Spending every cent you earn without making sure you’re taken care of is financially irresponsible and can be a cause for regret later.

With these things managed, you are well on your way to having greater control over your finances. No matter how much money you make, you can still make decisions that keep you in the black. Honestly evaluating your income and expenditures, living within your means, and using credit responsibly will put you on the road to financial responsibility.