SIMPLE 9 HABITS TO DEVELOP FINANCIAL STABILITY AND SUCCESS
Just like any goal, getting your finances stable and becoming financially successful requires the development of good financial habits. I’ve been doing some researches on this topic extensively in the last few weeks in my quest to eliminate debt, increase my savings and increase financial security for me and my family.
I’ll talk more about these habits individually, but wanted to list them in a summary.
Here they are, in no particular order:
1. MAKE SAVINGS AUTOMAGICAL: This should be your top priority, especially if you don’t have a solid emergency fund yet. Make it the first bill you pay each payday, by having a set amount automatically transferred from your checking account to your savings (try an online savings account). Don’t even think about this transaction — just make sure it happens, each and every payday.
2. CONTROL YOUR IMPULSE SPENDING: The biggest problem for many of us. Impulse spending, on eating out and shopping and online purchases, is a big drain on our finances, the biggest budget breaker for many, and a sure way to be in dire financial straits. Learn to minimize or stop these spending’s.
3. EVALUATE YOUR EXPENSES and LIVE FRUGALLY: If you’ve never tracked your expenses, then evaluate how you’re spending your money, and see what you can cut out or reduce. Decide if each expense is absolutely necessary, and then eliminate the unnecessary.
4. INVEST IN YOUR FUTURE: If you’re young, you probably don’t think about retirement much. But it’s important. Even if you think you can always plan for retirement later, do it now. The growth of your investments over time will be amazing if you start in your 20s.
5. KEEP YOUR FAMILY SECURE: The first step is to save for an emergency fund, so that if anything happens, you’ve got the money. If you have a spouse and/or dependents, you should definitely get life insurance and make a will — as soon as possible! Also research other insurance, such as homeowner’s or renter’s insurance.
6. ELIMINATE AND AVOID DEBT: If you’ve got credit cards, personal loans, or other such debt, you need to start a debt elimination plan. List out your debts and arrange them in order from smallest balance at the top too largest at the bottom. Then focus on the debt at the top, putting as much as you can into it, even if it’s just #500-1000 extra (more would be better).
When that amount is paid off, celebrate! Then take the total amount you were paying (say #1500 minimum payment plus the #500 extra for a total of #2000) and add that to the minimum payment of the next largest debt. Continue this process, with your extra amount snowballing as you go along, until you pay off all your debts. This could take several years, but it’s a very rewarding process, and very necessary.
7. USE THE ENVELOPE SYSTEM: This is a simple system to keep track of how much money you have for spending. Let’s say you set aside three amounts in your budget each payday — one for gas, one for groceries, one for eating out. Withdraw those amounts on payday, and put them in three separate envelopes. That way, you can easily track how much you have left for each of these expenses, and when you run out of money, you know it immediately. You don’t overspend in these categories. If you regularly run out too fast, you may need to re-think your budget.
8. READ ABOUT PERSONAL FINANCES: The more you educate yourself and get information, the better your finances will be.
9. LOOK TO GROW YOUR NET WORTH: Do whatever you can to improve your net worth, either by reducing your debt, increasing your savings, or increasing your income, or all of the above. Look for new ways to make money, or to get paid more for what you do. Over the course of months, if you calculate your net worth each month, you’ll see it grow. And that feels great!!!
Apply these simple procedures and you’ll see your financial stability improving on a daily basis.
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