1. Know your current financial situation.
Before you can make plans to save for anything, whether it’s for your children’s education, retirement, or buying your dream home, you need to know where you stand financially today. You may need to go to the trouble of getting a financial planner if you don’t know how to create a financial plan. If you know how to create a financial plan, you can save a good amount of money by hiring a financial planner.
2. Save regularly.
Acquiring the habit of saving is a good virtue. You’ll never know when you desperately need that extra cash when unforeseen events happen, like downsizing or a loved one falls ill, requiring a lot of medical attention and leading to high medical costs. As a guide, it is imperative that you have set aside 3-6 months of your current salary to cover emergency needs.
3. Control your cash flow.
No matter how rich you are, you need to be able to control your cash flow. The simple rule is that what goes into your pocket should be more than what comes out of your pocket. You need to know what item is giving you income and what is causing you to spend.
4. Reduce your expenses
Start by tracking your daily, weekly, and then monthly spending. Find those expenses that are not a necessity and eliminate them. A good example of this is paying for subscriptions to magazines you don’t read. When you’ve identified all of these items that aren’t worth your dollar, you can dramatically reduce your spending by 25-30%. It is advisable to have only one credit card so that you can better control your expenses. Make sure you pay the full amount by the due date of each credit card bill before it turns into an incredible debt.
5. Review your debts
As a general rule, your incurred debt should not exceed 30-35% of your total income. Gambling and vices are good candidates that can lead you into debt. Poor money management can also lead you into debt, even if you had won the 2 million lottery or inherited great wealth from your relative.
6. Be frugal but not stingy
Only buy products when they give you good value for your money. It’s wise to know when to buy something quality and pay a premium versus when to buy something less branded but still serving the same purpose as a branded item. If you were to always choose items based on cheap prices, that item could quickly fail and cause you to buy another one, leading to higher expenses than you originally anticipated. You will also be labeled as someone stingy, unwilling to spend money when absolutely necessary.
7. Review your investment portfolio
If you’ve invested in stocks, mutual funds (unit trusts), or multiple funds, you’d like to review them periodically. Your review period can be quarterly, semi-annually or annually. For example, when you’ve done your quarterly analysis and find that the stocks of the company you’ve invested in aren’t giving you the desired returns based on financial numbers or outside interference, you’ll want to replace those stocks with stocks of the company with a better value. performance.
8. Get financially informed
There’s a lot of financial information out there and it’s free when you browse the internet or go to your neighborhood library. You can attend seminars, read books, read newspapers, and listen to audio tapes, which are some of the ways you can gain more knowledge.
9. Be generous
There is a famous saying “You get what you give”. When you are generous, somehow the spiritual forces know and reward you many times over. When you give, there is a natural tendency for the other person who receives to want to give back.
10. Pay yourself first
Before you pay all your monthly expenses, you must cultivate the habit of paying yourself first. If you have a day job, when it comes to payday, you can start depositing, say, 5% of your salary into another bank account. You can gradually increase this percentage when you have more take-home pay or feel you deserve a higher reward. Many people pay for themselves in the end. By the time they have paid other expenses, they will have nothing to pay for themselves.
