Developing good practices are vital for financial health. It is important to always be in the knows...know where your money is coming from and where it is going. Keeping track of the movement of your money is essential to managing your finances. It creates a level of transparency that is necessary for making good choices in the short-term and longe-term.
Simple steps to get your finances in order:
“You must gain control over your money or the lack of it will forever control you.” —Dave Ramsey
Create a plan that list all expected earnings and essential and non-essential expenses. The goal should be to not spend more than you earn, while setting aside money for unforeseen occurrences, such as temporary loss of income.
2) Pay Yourself First
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” —Robert Kiyosaki
In order to build wealth, it is important to pay yourself first. Keeping a portion of your earnings for yourself is necessary on the journey towards financial freedom.
3) Invest in Your Future
" If you would be wealthy, think of savings as well as getting." — Benjamin Franklin
Make your money work for you. Create an investment plan that will maximize your investment. For instance, you may be losing income by keeping your money in a savings account that generate a 1% or less return on your investment when you could be earning 10% or more in a retirement savings plan.
4) Protect Your Family
There are stable households that suddenly become under undue financial distress, due to the loss of the main breadwinner. This can be prevented by maintaining appropriate life insurance policy.
5) Don't be held Captive by Debt
Debt can be split into two categories, good debt and bad debt. Good debt pays for itself, whereas, bad debt depletes wealth. Too often people feel stuck with high cost debt that provide no added value. These type of debts one should stay away from.
6) Credit Worthiness
Having good credit is fundamental to the journey towards financial freedom. It tells lender you are capable of managing your debt. Lenders favor individuals with high credit ratings because they are considered low risk. As a result, borrowers are able to attract more attractive borrowing terms.