In life, there are specific rules you should never break under any circumstance. For example, bringing uninvited guests to a wedding or not picking up your dog’s waste in the park. The same goes for putting fruit on pizza or crossing the streams if you ever dreamed of becoming a Ghostbuster.
There are rules to keep in the case of your personal finances. But, sometimes, rules have to be broken, especially during a financial crisis. So, with that in mind, here are six personal rules you can ignore when you need to.
1. Borrowing money from friends or family.
Whenever you’re in a precarious financial situation, the first place you most likely will turn to will be friends and family. But, as the saying goes, “Before borrowing money from a friend, decide which you need most.”
There are actually several reasons for that sentiment. For starters, it’s awkward. While admitting that you’re in a tough spot financially is the first step in rectifying the problem, you may not want to let others know how dire your situation is.
Additionally, this asking for a loan might be them on the spot. In other words, they may feel pressured to lend you money because they’re a relative or close friend. And, this could also put them in financial hardship.
As if this isn’t enough, there could be misunderstandings. For example, since there may be an informal agreement, you may be too relaxed when it comes to paying them back. And, in some cases, this individual may hold this over your head and have a “you-owe-me” attitude.
However, if you need money to cover necessary expenses like groceries or rent, this might be your fastest and most affordable option. Just make sure that you have a strong relationship with the lender and that you’re not putting a financial strain on them as well. And, to avoid any conflicts, have a loan contract in place.
2. Save 10% of your income.
The general rule of thumb was to save 10 percent of your income when it came to retirement savings. Not only is that less likely today, but it’s also not exactly a priority when dealing with a financial crisis.
“While it’s a fine start and certainly better than nothing, it certainly shouldn’t be used to benchmark success,” Michael Troxell, a senior wealth manager at USAA, told the Huffington Post. “That number won’t be enough for 90 percent of individuals, especially with longer life expectancy and rising healthcare costs.”
A significant problem, according to him, is that the 10 percent rule does not take into account expenses. “It is the expenses that end …….