Financial responsibility entails a number of specific qualities that an individual must have in order to be successful at the task. It is definitely a term that some people use lightly, while others take it completely seriously. Financial responsibility is essentially the key to being financially stable and staying out of financial trouble, like debt or ending up with no money at all. A key to being financially responsible is realizing what financial obligations must be meet for you to be able to live comfortably, monitoring your spending habits, and saving money when and where it is necessary to do so. Keep reading for more information on financial responsibility.
The Real Deal on Credit Cards
Yes, it is very true that credit cards can be life saver when it comes to needing emergency money to take care of an urgent matter. However, credit cards can be a dangerous tool when payments cannot be made on time and interest continues to increase. An important part of financial responsibility is to be able to take care of financial obligations whenever they come up, and a credit card is a good way to be able to do that. But with the ownership of a credit card, you must be able to keep up with payments to stop yourself from going into credit card debt. This means staying under your credit card limit, using the card only when necessary, and making payments according to your credit card terms. Understand that with the use of a credit card, you will be required to pay back more than what you initially spent. If you must apply for a credit card, you must be willing to take on the full financial responsibility involved in owning one.
Borrowing within Your Means
For some, it does not take much effort to stop themselves from borrowing. In some cases, it is appropriate and necessary to purchase an item under the circumstance of borrowing. When taking part in financial responsibility, it is important to determine which purchases should be bought by borrowing money, and what purchases do not require borrowing money. It also requires borrowing money on a responsible budget. For example, it is very common to purchase homes using a loan. But if you do not need to purchase a huge home to accommodate a family of 5 and you only need to house 2 people, there is no need to borrow the amount of money needed to cover such a big home. Taking out loans requires a lot of financial responsibility and you will be required to pay back more than you initially borrowed. If you are not able to borrow within your own means, it is highly recommended that you stay away from borrowing money.
Saving for Emergency Spending
There is nothing worse than a financial emergency arising and having no funds to take care of it. A major part of having financial responsibility is the ability to save money for extra spending and emergency spending. Saving can include a variety of methods. Some of these methods include opening a savings account to have funds automatically or manually deposited, investing in businesses or stocks, or even something as simple as starting a savings jar at home. However you decide to start a savings fund, keep up with it by taking a small percentage of your income each week or month. Deciding to save by investing will require strategic planning and possibly financial advice.
The Art of Budgeting
Some individuals may deem it too difficult to budget, therefore deciding not to do it. Budgeting goes hand-in-hand with saving and should be done as an important part of having financial responsibility. Budgeting involves spending money only when necessary and being able to save what has not been spent for emergency purposes. Budgeting also means knowing your spending limits regardless of what those around you are doing with their money. Regardless of how much money you have at one given time, if you are not able to afford the cruise trip that your coworkers are planning during the summer, do not risk your financial stability by going on the trip. If buying the brand new phone that has just hit the store requires you skipping your credit card bill for the month, do not buy it. Budgeting requires hard work and sacrifice, but the ending rewards are so much greater than ending up in financial jeopardy.
A big part of having financial responsibility is recognizing what you need to do for yourself to be financially stable. That means that you have to determine what purchases are necessary and what purchases will just be a complete waste of money. It also means taking financial help and using them wisely, like credit cards and monetary loans. Being financially stable requires a lot of financial responsibility, but once you get the hang of budgeting, saving, and spending only when necessary, you will find it more comfortable being a part of the financially-stable club.