When it comes to finances, what are you afraid of? Everyone has fears that are finance-related; it's normal. In order to live life a little happier and to develop into a more responsible individual you need to conquer certain financial fears. Part of growing is understanding how much finances play a role in your life and how to position yourself so that you and your money have a good relationship.
What exactly are financial fears? For the most part, financial fears have to do with difficulties that are money-related. The reason why we are usually afraid of certain financial subjects (like retirement) is because we do not like to think of ourselves as getting older.
Whether or not you are in denial about getting older, time will inevitably go on. So it is important to make educated and mature decisions in order to conquer our financial fears so that we can live life with less fear.
Living on your own
Sometimes you just have to jump out of your nest to see if you can fly. Living on your own is a common fear. This means moving away from home to pay rent or a mortgage. There is nothing wrong with staying at home or with a relative and paying rent, but chances are your parents or family members let you slide payments when you fall behind on your bills.
Ideally, you want to save up to move out and purchase your own home. This is simply not feasible for most young adults, anyone without a lot of money saved, or someone without a very promising career. Consider renting to see if you have what it takes to manage your funds responsibly.
Calculate your spending habits for the past year and figure out where you can make cuts. New shoes and clothes every other paycheck, concert tickets, and other unnecessary spending quickly adds up. Reduce your leisure spending and you should have a clear understanding of the type of place you can afford to rent (or possibly own).
Anyone that cannot afford to move out on their own just yet should make plans to earn enough money to sustain his or herself. You do not want to rely on others for the rest of your life. Plus, moving out on your own provides a certain sense of pride. Once you have lived on your own for over a year and manage to pay your rent on time, it's safe to say you can handle paying for a mortgage. That should motivate you to work harder, save more, and one day own property.
Open a joint account
There comes a point in every serious relationship when opening a joint account is discussed. There are ways you can approach opening a joint account, since it's often a delicate subject. The goal is to put trust into someone else while still protecting your own finances.
Joint accounts can be beneficial for two major reasons. The first is because a joint account can help you determine how reliable the other person is when it comes to finances. The second major benefit of a joint account is that it can help build your credit score.
However, joint accounts are a little risky since you are putting your credit on the line. It can either work out to your favor or present you with problems. In a perfect world a joint account proves rewarding in that it helps increase your credit score. When things are not so perfect, a joint account can hurt your finances and credit score. Do not let that scare you. Open an account with someone you trust and follow the tips given to prevent a disaster from occurring.
Speak with your partner when the time is right and discuss the option of opening a joint bank or credit card account. Use the following advice to help you both protect yourselves.
Avoid opening a joint account to spoil someone you love. Instead, you should work together to manage the finances properly. For instance, after opening a joint checking account, each person can add the same amount to that account on a weekly basis. Whenever the two of you go out for dinner, travel, or spend time and money together you can limit your budget to the amount on the account.
Since both parties are adding the same amount and spending at the same time there should be no discrepancy over the funds available or spent. You can also make a list of purchases that are allowed for essentials such as gas, groceries, and other transactions when not in the presence of one another. As long as both parties are comfortable with the terms outlined when opening an account and follow the rules set forth this can be the first step toward establishing true trust when it comes to money.
Another option to consider is to add another person to your credit card. Most credit card companies will allow you to set a limit for the person on the joint account. This option allows you to somewhat manage their spending habits and limit your risk of acquiring a lot of debt. Over time you may choose to increase the limit as trust builds.
The trust you establish with another person could one day help you establish excellent credit with financial institutions as well as one another. For those in serious relationships that reliability can help you make bigger financial decisions such as purchasing a home together without trepidation.
Saving for retirement
Even though retirement sounds light years away, it's something you need to start saving for. The average age of retirement is 61 and climbing. The truth is, people seem to keep putting off saving for retirement with the assumption that they cannot afford it and wind up not being able to afford to retire.
Every little bit of money adds up and when you save properly, you may even be able to retire early. Imagine being able to live life by your rules a few years earlier than expected. You are definitely going to want to start saving for retirement today, or take it seriously if you have not in the past.
One step at a time
Apply the advice given to you in this article. There are many other financial fears that people have a hard time conquering as well. Knowing how to invest or wisely budgeting money for a trip are all part of staying on top of your finances.
Stay tuned for more advice on how to conquer any financial fears that are holding you back from seeing what you're made of when it comes to money.
This article originally appeared on MyBankTracker.com.