Generating wealth is not only about how much you make but also about how you grow and nurture what you get. It is imperative to develop healthy money habits.
The following tips will help you achieve your financial independence goals;
Pay yourself first- It is a popular phrase in finance planning that means directing a specified amount of income to either savings or investments at the exact point it is received. The goal is to ensure that your savings and investments are taken care of first before sorting your bills and making purchases.These funds could go into an emergency fund,retirement plan or long-term investments.
Keep an emergency fund separate from your savings account-an emergency funds helps you get by in the event that you lose your primary source of income.It is also useful in tackling some of life’s unforeseen crisis thereby keeping debt at bay.Consequently emergency funds reduces stress by knowing you are covered in case of emergency. Ensure to keep the money in a separate account such that you cant spend it on a whim no matter how much you may be tempted.
Budget using the 50/30/20 rule-budget helps track the inflow and outflow of money.The 50/30/20 rule suggests that 50 percent of your income should go to your needs,30 percent goes to wants and 20 percent to investments and savings.The pre-determined amounts instills a sense of discipline and limits you to a certain limit of spending.
Avoid high -interest debt-pay for your commodities upfront as opposed to paying in installments that accrue interest.In the long run you end up saving a huge amount of money.
Prefer Assets Over Liabilities-Assets are commodities that appreciate in monetary value while liabilities depreciate in value. Investments such as land, stocks tend to increase in value as opposed to vehicles which depreciate as they are used.
Diversify your income streams-Do not put all your eggs in one basket. The effect of losing your only source of income can be devastating.Diversifying your income portfolio will increase your financial stability by cushioning you against debts and financing your lifestyle even in the event of a layoff for example.
Other benefits of diversifying income includes;to cater for inflation and rising prices of commodities,to take control of your income and for faster achievement of financial goals.
Wait 24 hours before spending money- The 24-hour principle suggests that before making an expensive purchase,one ought to give themselves a 24-hour window period to deliberate over it.
If you will still want the item after 24 hours it means that you probably really need it and won’t experience the buyers remorse.