What rules do you follow when dealing with your money?
By: Sheiresa Ngo (cheatsheet.com) – It seems that almost everyone has an opinion on what you should and shouldn’t do with your money when you’re looking for financial advice. More likely than not, some of that advice has been peppered with a set of rules you should follow. While these rules may help some people, there are situations where it’s not realistic to follow them. Abiding by these rules could actually do more harm than good if you don’t make necessary adjustments.
If you’re desperately trying to get back on track with your finances, you may be attempting to follow a strict set of money rules. However, what you may not know is that you don’t have to be so rigid when it comes to certain financial advice. Here are some money rules you can break.
1. Save 10% of your income
How much you save depends on several factors. Depending on your situation, 10% might not be your lucky number. Your best bet is to save what you can and then figure out your plan from there. Saving what you can afford is the way to go until you can pay off some of your outstanding debt. After your debt is taken care of, you can apply the extra money used for your debt repayment toward savings. Another situation where you’ll want to ignore the 10% rule is if you’ve put off saving for a long time. You may need to go beyond 10% (for example, 20%) so you can reach your savings goals quicker.
2. Don’t withdraw from your 401(k)
We can hear the horrified gasps now. Yes, a retirement account is vital for ensuring your financial future. Without adequate retirement savings, you’ll be in a position where you may have to work longer or take on a part-time job. However, if you encounter a severe financial hardship and you’ve already tapped your emergency savings fund, you may have no other choice but to request a hardship withdrawal. For example, if you are having trouble paying for groceries or…
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