Small changes eventually add up to massive results. One smile can start a friendship. One word can end a fight. One look can save a relationship, and just like that making small changes in your financial habits can amplify your financial status by manifolds.
There is nothing more important in life than being financially independent and securing a worry-free future for yourself. The first step towards this financially stable dream life is building healthy financial habits and dropping the bad habits TODAY!
Allow me to take you through some steps to attain a financially stable dream life!
Financial Habit 1: Review and revise your financial plan on a regular basis.
Undoubtedly one of the finest financial decisions you’ll ever make is to create a strategy for your money. Making a simple starting strategy is insufficient, though. Making sure you routinely evaluate and update your strategy is just as vital, if not more so.
Your financial plan is there to aid in the evaluation, planning, and enhancement of your current and future financial situation. In order to establish a good action plan, make financial decisions with ease, and consider your current financial situation and your goals.
You should periodically review your plan, at least once a month, and seek to update any crucial information at least every three to six months if you want to get the most out of it and increase your chances of success. It’s vital to update your plan anytime an important life event occurs, such as getting married, buying a new house, starting a family, acquiring a new career or earning more money.
Financial habit 2: Set relevant financial objectives as your second money-saving habit.
Setting goals is the first and possibly most crucial step to achieving financial success. Without goals, it is impossible to monitor your development and recognize accomplishments. Make your goals “S.M.A.R.T.” (specific, measurable, attainable, relevant, and time-bound) while creating them.
This money habit is also scalable and may be practiced at different times throughout the year. You may, for instance, set a goal that each week, you will deposit at least Rs. 100 into an investment account or that each month you would contribute at least Rs. 1000 to your retirement savings. Making sure you have both short-term, and long-term financial goals are also crucial. If you have both, you’ll maintain your motivation while concentrating on securing your financial future.
Financial habit 3: Budgeting
Making a budget is a crucial financial habit to develop since you should constantly be aware of the amount of money entering and leaving your accounts each month. If you don’t know this crucial financial information, you could be spending more than you earn, resulting in debt and a bad credit history.
When creating your budget, take into account your monthly take-home pay, your regular spending on “needs” like food and rent, and how much you set aside for “desires” like dining out, vacation, and shopping.
Financial habit 4: Find passive income to increase your income.
You must find strategies to increase your monthly passive income if you want to increase your wealth and reduce your debt faster. Passive income is simply money you earn over time from activities that need little ongoing maintenance. Rental properties, stock dividends, and side businesses are a few instances of passive income.
Financial habit 5: Build an emergency fund to safeguard your assets.
Having an emergency fund is essential as a safety net to prevent you from depleting other monies set aside for regular costs. If you don’t have one, you run a far greater risk of getting into debt since you might need to utilize funds that you had set aside for credit cards or other obligations to cover the unexpected expenditure.
Financial habit 6: Pay yourself first
Paying yourself first is a fantastic strategy to save money quickly. This implies that you pay yourself first by conserving cash before you spend any.
For instance, you may save a certain amount or percentage of your income each pay period. You may save money this way and spend it later. You should cultivate this money habit since you are prioritizing your financial objectives.
Financial habit 7: Make more deductions
Try to boost your deductions as much as you can. This will lower your taxable income and help you swiftly accumulate retirement savings. Make it a point to raise your deductions to the highest amount that your company will match—doing so will be like receiving free money right in your pocket!
Brace yourself to inculcate these good habits to reach your financial goals and drop some bad habits like Accumulating credit card debt, Shopping out of boredom, Impulsive buying and making purchases for status.