Prudence is one among the key principles followed in accounting. Summarising the principle, revenues or incomes are recognised only when the receipt of the same is very certain whereas expenses are accounted for as soon as it appears probable. Also, one must not be conservative while recording assets and should not underestimate liabilities.
Most of the money problems should get settled if this principle is applied in our daily lives too. We must not splurge irresponsibly with our eyes on an income that may arise in future. The credit card companies will always be munificent with cash backs and discounts which are merely smoke screens. As my dad always says, “Nothing in this world comes free!”. They are under no obligation to help you gain more than they do, so there will always be a catch that would be hiding in plain sight.
Also, be careful when it comes to expenses. Always keep aside a certain amount for contingencies. For the probable expenses that you have foreseen, be prepared. Save first and you can actually spend the remaining in peace! There is nothing as peaceful as living within your means.
It sure is no fun to save, I agree. I myself was dismayed when my dad linked my salary account to make automated, monthly installments towards recurring deposits & mutual funds. But the security I felt when jolted with an exigency, was well worth it.
Written in response to Daily Prompt :Prudent
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