7 Powerful Financial Habits
Truth is, we don't know what will happen in the future. Sure, you may become successful in your career and earn tons of money in your 40's. But you can also get sick, get stuck in a toxic office environment all the while tied up in obligation and debt.
Had I followed these rules immediately after University my financial life would have run like a well-oiled machine. You have a better chance.
This is a good feature that banks offer to help their clients in their saving efforts. The idea is if you don't see the money, you won't spend it. A portion (you will choose the amount, say $200) of your monthly net take home pay will go into a separate account, your savings account. A few years later and without noticing you would have accumulated a lot.
This is a concrete practice of the personal finance innovative concept of "Pay yourself first"; that is, before paying the utilities companies, shopping malls and grocery stores.
2. Adopt Envelope System Budgeting
This is where the 80% that gets credited to your salary ATM gets allotted to your monthly expense funds. You will need an expanding file folder the size of your paper currency with labels. Label each for all your monthly expenses such as house rental, utility bills, food, grocery, transportation and so on. You will fill each with actual cash allotted for each. This will serve as your budget for the month.
This is very useful in keeping track of your expenses so you don't overspend. Any excess in your budget at the end of the month can be used to build your emergency fund.
Keeping your savings untouched is key to a more comfortable, financially free life in the future
3. Build An Emergency Fund
An emergency fund is a very liquid stash of money easily accessible when you need it. Examples of these emergencies would be a need to visit the dentist, certain home repairs like when your sink suddenly gone whacko and sudden expenses that is not included in your monthly budget explained in no. 2.
Having an emergency fund will make your life a lot easier because you have something to draw from which prevents unnecessary stress. This will also be your cushion in case you get laid off, so you have at least enough to cover 6month worth of expenses (the average time to get you up and going again).
This is very important so you do not dip into your savings account. We want your savings to grow. Keeping your savings untouched is key to a more comfortable, financially free life in the future.
4. Practice Minimalism
Start a garage sale and put the sales proceeds into you savings account. Instantly, your bank account is fuller and you'll find yourself with more free space. Keep it that way by staying out of stores, online shops and making do with what you have.
Live within your means. If you get promoted, do not level up your lifestyle, rather take this as an opportunity to save more.
5. Develop Self-Discipline
Once you enjoy the benefits of minimalism, you won't get easily tempted to buy on impulse. You will buy only the things that will make life easier or add joy and beauty to your life.
You know it is hard-earned money. Time is money. You have exchanged your time to earn those cash. Time which you could have used to enjoy life, time with family, time for yourself. Remember how we regret a lot of our purchases, that they were just waste of our money.
We must put on more planning in purchasing, picking only few quality and durable items. We may want to wait for big sales like Black Friday sale before buying.
6. Think Passive Income
Now, this is where the real goodness start. This is where financial freedom comes in when you don't have to exchange your time for money. You will let money do the work of earning for you.
Invest in Excellent Companies Traded in the Stock Exchange
Invest in Blue chip stocks. This is a perfect way of partaking in the growth and earnings of the big companies. Stock prices of good companies tend to go up long term. You can build your portfolio around these good companies.Get started. Just remember to diversify and buy low, sell high.
Invest in High Yield Dividend Stocks
There are times when the overall stock market crash and stock prices drop. You will see no realized gains or capital appreciation in your stocks. But if you invested part of your portfolio in High Yield Dividend Stocks, they will pay off cash dividends at 8-15% and then you will still have earnings.
7. Do Not Incur Debt
Being tied up in a 25 housing and car loan amortization will ensure you are tied up working to pay for this loan almost all of your life. Likewise, being deep in credit card debt for mindless shopping will set you for a not so nice ride.
If you practice all of these, you're good to go. But there is one more important thing. In reality we are human beings and we cannot live our lives around finances. We have to find fulfilling ways to begin earning our active income. It is in the workplace where we develop self-worth, confidence even friendships. So pick a job that has harmonious working environment, worker friendly policies, a competent boss that builds you up and support you.
Take care of your health & keep learning new skills. We have only one body and it is our physical and mental energy that we use to do our work. It is only best that we keep it in good shape.Keep upgrading your skills and gain more experience to stay relevant, marketable and in demand to get promotions, higher salary and work opportunities.