1. Saving Is The Best Investment:It is a norm to go for the career paths that ensure you a great salary these days. However, while chasing down big bucks, we tend to forget that it is necessary to be careful with our income, regardless of what we make. Logically speaking, the sum total of all your savings is more important than what you make each month. Even a low salary can go a long way if it is spent in a systematic manner.
2. Live Below Your Means:The best and most effective way to save is to consider your earnings lower than they actually are. Just keep in mind that you should spend your money not on the things you can afford, but on the things that cost lower than that. Instead of investing your money, consider saving first. Keeping your money in a bank account with a high interest rate is perhaps the best investment option you have.
3. Use debt Cards Wisely:It is important to avoid the temptation to use your credit cards on everything you buy. Credit card debt is a reality that can destabilize your financial situation faster than you can imagine. However, it is okay to use them as long as you do not get yourself into credit card debt. Being able to pay off your credit card bills monthly gives you a high credit score. This helps you lower your borrowing costs for student loans, house loans, car loans etc. A higher credit score helps you shave off thousands of dollars of interest while paying back loans.
4. Analyze Your Spending Habits:A useful way to understand the flow of money in your life is to note down how much money you are spending each day. Take a good look at the amount of money you take with you when you go out every day and how much you have when you return home. Figure out how much money you spent on food, utilities, transport etc. Prioritize just one or two things that you have to spend money on, but control what you spend on other things. Do this for a month and see how much you can save. You can adjust this as your priorities change.
5. Be Cautious With Luxury Items:The next thing you have to be careful about is the luxury items you buy. It is quite okay to indulge in a few luxury items as long as you are mindful enough to make up the money you spent on it. But it is equally not okay to go beyond your means to make such purchases because they do you more harm than good in the long run.
6. Make Frugal Friends:Do not make impulse purchases because of peer pressure. Choose frugal friends instead of people who have expensive habits. Having neighbors who are always showing off their new car or the latest LED TV will motivate you to attain the same things. Surround yourself with people you are smarter about money so that you can follow their examples. Remember, having expensive things does not guarantee lasting happiness. It has been proven that you get used to the expensive items you own very soon. Just as soon as these products stop giving you that extra happiness, you will start craving the next feel-good-item you must have. Instead, invest in learning, developing skills and other such wholesome things.
7. Talk About Your Money Matters:Feel free to talk about your money matters. Talk to your parents, talk to your partner and talk to your friends. You’d be surprised at how much you could learn from these conversations. It is time we stop avoiding this topic like it is the plague. Especially when you have problems with your credit and debit, talking to others can be a great way to change your spending habits. Keeping your worries to yourself will only delay their solutions.
8. Educate Yourself On Economy:Educate yourself on managing money. It would have been awesome if they taught us how to do your taxes in school, but sadly they don’t. Take matters into your own hands and start from the beginning. Read the easiest books you can find on managing your finances and doing your taxes by yourself. After learning the basics you can move onto reading more complicated aspects of finances. Understanding how to best use your financial assets can go a long way in helping you become economically competent.
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