Having good financial habit is a must for everyone but most usually don’t have these or have not spent the time to take a good look at their finances. Because you are here reading this I can assume that you have decided to take your financial life a little more seriously.
Below are 10 great financial habits you must imbibe to get you to achieve the financial freedom you have always dreamed of.
If you cannot save you do not have the seed of greatness in you. This is a quote by one of the great men in history and he is right. Saving at least ten percent of your income will put you on a level of comfort where you feel safe.
Saving 1 hour of your income every day makes you a millionaire before you know it!
Of course, the financial gurus out there and many financial books will tell you to save ten percent of your income, I think, for the purpose of options and financial independence, you should have more than ten percent saved. Save at least twenty percent of your income so that you can get to your destination quickly.
What if you don’t have a destination to get to?
If you are just saving for the sake of saving or you don’t have any financial obligations to hold. (This applies mostly to young adults and students that are still single and have allowances from parents).
Are chances you will need money someday and isn’t it safer to already have a nest egg of cash somewhere you can get to easily?
Saving your money gives you options of a better life.
What is luck?
Answer: Luck is that intersection where preparation meets opportunity; and how right this statement is. When you have an opportunity to make a life-changing investment and you have the cash to do it right now, did you just get lucky or were you just prepared?
Lack of budgeting has ruined many families and marriages, not to talk of lives. Budgeting is when you allocate different sums of your cash for their respective reasons.
Why do you need a budget?
Budgeting gives you a higher level of control over your money. It helps you to delay short-term gratification for long-term benefits.
It also helps you to know exactly where your money is going. Many people usually end up spending all their cash and then wonder where all the money went.
I have been in this situation myself before.
But when you budget your cash, you know exactly where your money is going and you become more responsible with money.
Investing your money is a sure way to sustain your money and make it work for you over time. This can also be called passive income.
Although so many people have heard of investing, few actually take the time to invest their cash in the world of consumerism.
The best type of investing that gives a higher rate of return is investing for the long run. Why?
Because it helps you to master your emotions
Investing for the long run can be tasking on your emotions because of the ups and downs of the market but as you become more familiar with the market, you will realize that this is just part of it and it should not phase you a bit about the fluctuation of the market.
In the long run, the market wins.
This is characteristic of the multi-millionaires and billionaires of not only our time in the persons of Warren Buffet and Bill Gates but also in the time of Andrew Carnegie and Cornelius Vanderbilt.
These are the ones we usually hear of because of the large sums of money involved but you should also give in your own capacity.
In the law of the universe, giving will always bring success and money back to you. plus, giving helps the humanity.
- Spending less than you earn
While making money is great, the thought of the things we can buy with that money is even greater. Many people usually spend way more than they earn and which keeps them in the constant state of debt.
Irrespective of what you make, you must spend less than what you earn and save the rest.
Better still, why not save some money first before the check even reaches you. You can make this arrangement with your company.
One sure way of going into debt is by trying to keep up with the Joneses. Stay in your financial lane. You have nothing to prove to anyone.
Trying to keep up with the latest fads and newest gadgets will put your financial life in ruins unless you are already a multi-millionaire of a billionaire. (if not, you wouldn’t be reading this right now).
If you are already in debt, find a way to systematically pay off all your debts. Meet your creditors and work out a plan for them to pay off your debt and keep it.
You will realize that in no time your debt will reduce and soon you will be debt free.
Know your financial net-worth
If you know your financial net worth, you will realize that you may be in trouble financially. Find a way to know your worth financially and also find a way to improve your net worth.
How do you calculate your net worth?
List all of your assets and minus the liabilities. If you realize that your liabilities are more than your assets, it means you have a negative net worth and you must begin to take action right now to solve that problem.
A better way, I have a free account with personal capital and linked my financial accounts to it. Within seconds I see my net worth, whenever I want to.
Have an ultimate financial dream
What will your future look like financially? How much do you have in the bank? What is the size of your assets? Do you have any investment in place making money for you?
What is your ultimate financial dream? You must have one if not you would be traipsing around spending all you have and realize that you are already old and have no nest egg to fall on, except maybe your pension.
Have an ultimate financial dream and write it down. Then begin to take proactive action to make those dreams come true.
Keep it simple
No matter what you do financially, keep it simple. Don’t overcomplicate your portfolio with so many investments that you cannot tract and please oh please, don’t invest in something you have no idea about.
There’s a saying that goes like this, “Keep it simple, stupid.”
If you know nothing about investing and creating a portfolio, get someone that has been in the game for long to direct you to a good CPA (certified public accountants) to advice you on what next to do.
Write down your financial goals
Just like having an ultimate financial dream, you should also have smaller financial goals for the day or the week and write them down. These will act as guides for your daily or weekly financial life and help you to spend your money more wisely.
It’s so important to write it down. A written goal gets ingrained in your mind.
These are the 10 personal finance habits you must have and they are not exhaustive, you should look to other sources also to find out how you can make your financial life healthy.
If this post has been helpful to you, you can leave a comment below letting me know how it has helped you make your financial life better.
About the Author: Maku Seun is a published author, speaker, serial entrepreneur, a blogger and the owner of www.makuseun.com from Abuja. He has a passion in equipping people with the mind-set to challenge the status quo and chase their dreams. Click here to visit his website.
The Frugal Onion says
I need to work on giving more. Right now I volunteer my time and budget $50 per month for random acts of kindness but I need to redo my budget so I can give to a specific charity.
Thats a wonderful start. We give via my employer’s giving campaign where they match dollar for dollar. This doubles the impact I create for my favorite charity which is a local animal shelter. It’s so nice to see the work they do in front of your eyes.
maku seun says
Giving is a wonderful way to start and I am glad you have taken the initiative by yourself to give that $50 a month. Thats great!
I strongly agree with your thoughts and seriously think it will help many people in building their personal financial status strong than before. I have also started saving 10% of my monthly income, and I feel great about it.
Albena Anis says
This post helps me a lot saving my money