The Twenty-Something’s Guide to Financial Stability
Anybody can be broke, but the attitude adopted towards that is what betrays it all. Some of us usually do not have what we call financial discipline when it comes to controlling money. Others are either too extravagant the moment they have money while others become misers which is also not healthy. The following are some of the ways to attain incredible financial stability.
Financial discipline is of paramount importance when it comes to managing your cash. For instance, one might acquire a loan from a bank or any other financial institution, but the way he/she spends the money will determine whether you will be successful or not.
Everyone requires a budget to effectively manage his cash. Wealthy people usually have a cash flow budget to determine which things comes first and which wants to forego. You must know your wants and your needs well before designing your own budget.
A journey of a thousand miles starts with one step. Likewise, you cannot wake up one day only to find yourself a billionaire. On your first few months of financial independence, you can start with the minor payments such as your cell phone plan.
No one succeeds alone. You must have somebody to guide you through, especially after college which is never a cheap activity, though necessary, to help you gain financial stability. Take advantage of your parent's clinginess before they send you off to the adult world.
Seek help from an experienced financial advisor
Look for a financial advisor who is trained and experienced in working on financial matters
Get rid of bad debts
There are no good debts, but some debts are worse than others. Begin with debts of the smallest balances. Thus you will be able to celebrate milestones earlier when you pay them off completely.
Save for emergencies and retirement
Emergency money should be saved in a separate high yield savings account separate from your primary bank to avoid temptations of spending it.
Mayhem is truly everywhere and as an adult, you are responsible for protecting yourself and all your stuff from it. Insurance saves you from shelling out thousands of dollars when emergencies such as fire and accidents occur.
Take investment risks
One characteristic of successful entrepreneurs is that they are risk takers. Don’t be afraid to experiment or invest when a business opportunity kicks in. Even in business, success comes after constant failure, but your willingness to stand after failure is what underpins your resilience to survive in the competitive business environment.
Read financial books
You must develop a desire to read financial stability books and get a hint of what other successful people did to build their fortune. These books and articles will help you understand the basics of the financial world, e.g. dealing with loans and a tough job market for young people.
To maintain financial stability, you must be aggressive with a strong desire to succeed. It’s not risky to put your money into equities, but it provides you with more growth —when the times will come of your need to grow, you will be probably able to handle all the risks. Don’t hesitate to explore any business opportunity you come across.
Someone said that time is money and therefore when you are wasting time, you are wasting money as well. Assuming you have a 401k, save time and put your money into an index fund that mirrors the stock market. Always ask yourself what you can do to improve your financial life when you are technically idle.
Be Realistic About Your Goals
It is crucial to realize that saving isn’t easy. It requires a lot of work and time. You must define your goals and what you wish to achieve to be able to plan for your money and your future investments.
Spend less money than you earn
It makes no sense to spend more money than you actually earn. It might sound obvious, but a lot of youngsters don't act like this when it comes to dealing with their finances. When your needs surpass your earnings, it basically calls for you to work harder.
Don’t spend money impulsively
This is one of the biggest problems for most of us. Impulse spending on restaurants and shopping is a huge problem for our finances and a guarantee of having a budget break.
Avoid falling into the trap of lifestyle inflation
The amount of your salary doesn’t matter! What matters is where your salary goes. You must ask yourself these questions; does my salary happily go to investments? Is my bank account healthy? Is my investment portfolio progressive or does my salary sadly go to luxury purchases?
Always look for better incentives
Incentives matter for individual behaviors and decisions in all industries, including the financial industry. Some people say that risk-takers are drawn to money just like to Formula One racing and that no matter how big the risk or reward are, these people will always want to challenge the limits. Look for a better incentive to control your finances.
Always keep financial records
You must ensure that you maintain a record of your financial dealings. This helps to give you a point of reference when you realize that something is wrong with your finances. It also helps you to budget your needs appropriately.
Create an appropriate investment portfolio
Once you've determined your investment needs, create a portfolio that is suited to meet them. Outline all the requirements to make a successful investment. Additionally, look for potential investments with fewer risks.
Live your own life
Don’t compare yourself to others. This can easily lead you to financial problems as it has the potential of making you spend more than you earn to live like somebody else. Live your own life!
When you consider the above tips, you will live a happy financial life and eventually gain financial stability. Learn to manage your cash.
Posted in ...Financial Planning