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Personal Finance: Rules of Thumb

When it comes to personal finance, there are many factors that need to be taken into account; however, there are some rules of thumb that you can use as guidelines to help you keep your finances on track. These rules of thumb look at all areas of personal finance from taking out personal cash loans such as car title loans in Stockton to buying a home to saving for your retirement. As each person’s situation will be different, you might want to vary these slightly, but here we will look at some useful rules of thumb to point you in the right direction.


When it comes to budgeting, it is good to stick to the 50-30-20 rule. This means that you should use 50 percent of your income for necessities such as paying for housing, groceries and utilities. 30 percent can be used for discretionary expenses such as entertainment and 20 percent should go towards achieving financial goals, such as saving for retirement or paying off debt.

financeBuying a Home

Try to follow the 20 percent rule which states that you should put down a 20 percent deposit when you buy a home. This will help ensure you don’t buy a home that you can’t afford and will make it easier for you to meet the monthly mortgage repayments.


The 10 percent rule states that you should be saving ten percent of your income towards your retirement. Another way of looking at retirement is that you should save 20x your annual income.

Student Loans

Follow the First-Year-Salary rule. This states that you should not borrow more in student loans than you expect to earn in your first year working. This will help to ensure you are not borrowing more than you can afford to repay.

Emergency Savings

Make sure to always have 6 months of your gross salary put away for emergencies.

Paying Off Credit Card Debt

Always pay off your highest interest credit cards first if you need to make a choice. The same goes for other debts. You may need to use personal cash loans to help you pay off your high interest debts, but then make sure these loans have lower interest rates than the original debt. You can use car title loans in Stockton for this purpose as you can negotiate the terms and conditions of the loan to ensure the interest rate is lower than your original debt.