When it comes to finances, there is a spectrum within which people fall; those with habits that assist to build wealth, and those who have room to improve their habits in order to move to this point. Critical to managing finances successfully is a consistent and disciplined approach.
This blog article aims to share some tips to stay out of debt, and begin to save. The healthier your financial habits, the sooner you’re able to:
– Find financial peace
– Plan to retire earlier while maintaining your desired lifestyle
– Take the holidays of your dreams
– Afford a quality education for your children
Save a percentage of your income every month
Saving a percentage of your income in a different account is a key way to build your wealth. Author Robert Kiyosaki sums this up as “paying yourself first”. This habit will keep you focused on a saving goal, and ensure you limit spending.
Spend less than you make
Another wealthy habit is to spend less than you earn each month. One of the best ways to achieve this, is to make a budget each month so you can allocate funds into specific line items and see where you are overspending. You can then re-allocate some of your spend to “savings”.
Put your money to work
Don’t be afraid to invest your money. As scary as it may be considering the current financial crisis – having an investing methodology can help you build your wealth. There are plenty of options available to you, so spend some time with your financial advisor to understand what option suits you best.
Know the difference between good and bad debt
Although there is a school of thought that says, “all debt is bad debt”, the converse to this is that there is some debt that will add to your wealth. For instance, borrowing money to buy an asset that will return more money is “good debt” – buying a house is a great example of this. Be wary of borrowing money for something that depreciates – as this is “bad debt”.
Set financial goals
When it comes to personal finances, most people have an idea of where they would like to be financially but very few have a clear timeline. Having a defined goal with realistic action points will get you one step closer to your financial goals. Put down your ambitions and work with your budget to set achievable timelines to this.
Adopting wealth-building habits is possible. Although your finances may not be where you want them to be today, there’s no time like the present to start investing in yourself and your finances. It all starts with deciding, being disciplined and consistent.
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