It has been observed that 80 per cent of personal finance is not financial education, but financial behaviour. If you can modify your behaviour with your finances, you can actually modify your financial future. It’s all about attitude.
Set Clear Financial Goals
As you establish financial goals, consider making them S.M.A.R.T.—specific, measurable, actionable, realistic and time-bound. Creating goals using these guidelines can help ensure that what you’re working towards is achievable while giving yourself a timeline for reaching your goal can be a motivator to stay the course.
Have A Budget
Budgeting allows you to streamline your expenditure, develop a spending plan and make savings. By following a budget, people are less likely to fall into debt or are better able to climb out of a negative cycle of debt.
According to Brian Brandow of Debt Discipline, “One of the most important financial literacy lessons I’ve learned is always to have a plan for your money and have regular check-ins on your overall financial picture. By tracking and checking in monthly, I was able to control my bad money habits and turn them around.”
Spend Less Than You Make
This seems like one of the simplest personal finance rules to follow; however, it can be one of the most challenging. It’s incredibly easy in a consumer-driven society to live beyond your means; a good rule of thumb is to try and save at least 15 per cent of your income. If you find it easy to overspend, try paying for things like clothes and groceries with cash instead of a credit or debit card. Withdrawing a fixed amount every month helps you be more aware and make better spending choices.
Create A Savings Deposit
Having that money automatically deducted from your paycheck and put into a retirement savings account ensures you will not miss it. Gradually increase the amount you save while decreasing the amount from which you live. You can save and invest the remaining 20 per cent to 40 per cent of your salary or income.
According to Thomas J. Stanley., author of The Millionaire Next Door, majority of self-made millionaires drove used cars and lived in average-priced housing. He also found that those who drove expensive cars and wore expensive clothing were actually drowning in debt.
Focus On Your Needs
In money management, you need to focus on your needs instead of your wants. Your wants will drill a hole in your purse but by focusing on the most important things in your scale of preference, you save instead of wasting money. Instead of spending money on designer clothes, movies at cinemas, holidays, night clubbing, that money can be pumped into buying investment books, purchasing stocks and bonds, buying land/protect at hire purchase or instalment payment basis, etc.