Some financial behaviour seems to be not especially helpful for the budget. Some decisions people are making with their budget are rather poor whereas for others, there is no other choice and they have to make such decisions.
This article will tell you more about some financial decisions and situations which seem to many people as something negative, although in the reality it does not necessarily mean so.
Renting a place of accommodation
Undeniably, not everyone has a chance to live in his or her own flat or house and in many countries, the majority of people have to rent a place for living. To some people, especially the ones living in the countries where owning one’s own flat or a house is still more popular than renting one, a need for renting a place for living seems like a financial tragedy. Indeed, most of the times the costs of renting even a single room can be higher than the costs of maintenance of an entire flat with a couple of rooms.
Still, it is crucial to understand that renting a place of living is not thus bad as it might appear as it gives an opportunity for people to explore other destinations and look for the optimal place for living and working. This actually proves to be a great way of living in many situations, especially if you consider the people who have to resign from moving to a better location with better opportunities for work just because they have already purchase a place for accommodation in their current place of residence. The people might be even less flexible in moving out in case they have a mortgage loan. At the same time, for mortgage loan, the total amount of payment per month can still be pretty high.
In any situation, it is recommended to keep the expenses regarding your place of accommodation below 30% of your total income.
Using bank loans
To many people bank loans seem to be one of the worst possible financial situations. Probably, only having a loan in another organisation with worse conditions can be a more negative case than a normal bank loan.
Beyond a shadow of a doubt, there are many risks involved in having a bank loan and it is great if you are able to manage your life in the way that you do not have to use these loans and still afford all of the necessary things for your comfortable life. When it comes to loans, it is certainly a poor idea to get money form a bank in order to purchase some goods just for your pleasure instead of saving money for these purposes.
Yet, there are two situations in which having a bank loan can be a great idea. For example, if you are borrowing money for the purchase of a house or a flat, you will have a chance to save a lot of money on renting and, at the same time, finally become an owner of your own home.
Another situation in which borrowing money might be sensible is investing into your education. Still, in this case, as you can imagine, it is crucial to estimate the probability of finding a job after getting a degree in the specialisation you have chosen. The market of vacancies and the attitude to high education can be pretty different in different countries and it will be a good idea to make an extensive research before you make your final decision.
Investing your money if you are not well-acquainted with the market
On the one hand, it might seem sensible that there is nothing good in investing your money if you are not well-aware of the market or you are at all a total beginner. To a certain degree, it is a very good approach especially when it comes to seemingly simple forms of investment which are in the reality pretty complex and require sufficient knowledge from people. One of the best examples of such forms of investing is undeniably Forex, which is not as plain and beginner-friendly as Forex brokers are trying to pretend.
Yet, it does not mean you have to be an investment expert or even have any specific knowledge in order to start investing. For instance, you can start investing into index funds. According to many investment specialists, this is one of the most beginner-friendly ways to invest and it is also possible to do it without using too large amounts of money for this purpose. By the way, index funds are comprising many different companies which is itself diversifying investments and making the process less vulnerable to risks.