In 2021, boosting our financial health seems as important as our physical, emotional, and mental health. The world economy wasn’t that great before the pandemic hit. Most people struggle with their daily expenses, and some barely could make ends meet. With the severe economic recession during the pandemic, we opened our eyes to the worst-case financial scenarios.
From big multi-million businesses to lower-level employees are going through a tough time managing a budget. If all this sounds relatable, read further to know how you can save yourself from bumping into major financial problems.
Ways To Boost Your Financial Health
Depending upon your income and expenses, you can follow these universal rules that apply to everyone from different walks of life. These tips will help you understand the financial game and give you a starting point to take charge of your life.
1. Is It A Need Or A Want?
Most of us walk into a supermarket to buy toothpaste and shampoo. But as we walk down the aisle filled with colorful-looking packets of food and goodies, we end up buying a hundred more things. So even though our initial intention was to spend only 8 dollars, somehow we end up paying over a hundred. And the guilt kicks in when we realize we are not even going to use those things we just bought.
This is every nine out of ten customers daily. And this applies to all aspects of your expenditure. So, the first rule of financial freedom is to identify your needs from your wants. Before buying an item you just saw, think deeply if you really need this? When wanting to buy a new car or a high-end laptop whimsically, wait it out for a couple of days. If even after a week you feel you need them, then that’s your need. But in most cases, these items will disappear the next morning, saving you thousands of dollars in credit card debt.
2. Repay Your Debts As Soon As Possible
In America, more than eighty percent of the population is struggling with some of the other debt. Some of the most common ones are student debt, credit card debt, car loan debt, and housing. These are just the basics. Some people are practically living their life in debt, waiting for death to pay them off or never at all. Don’t be that person. And don’t be that person either who spends the rest of their life repaying debts from their monthly income throughout their lives. What happens is that you end up paying thousands of dollars way more as interest rates keep increasing.
So, if you have the resources, repay all your debts as soon as possible. Then, not only will you save your money in the long run, but you can live freely and with a lot more dignity. Moreover, one must always use their wisdom to avoid getting into unnecessary debts. While some debts are unavoidable, like student loan debt, some like credit card debt and mortgage debt are unnecessary.
3. Live Below Your Means
There is an old proverb that says cut your coat according to your cloth. Unfortunately, more than a hundred million people in the world today are living on credit card debt. How in the world are they ever going to have financial freedom, in this case? The situation itself is an indication of people’s desire to live beyond what they can afford. As the world continues to develop and change, the need for a higher standard of living seems to be the norm. This is why most people make poor financial decisions in the first place.
Regardless of what’s the norm, it is sensible to live below your means or at the most at par. However, following the status quo can be your shortcut to poverty if your income doesn’t increase.
4. Save But Also Invest
Traditionally, people believed that it is crucial to saving money for the future. An investment was thought to be foolish. But as more and more people become financially savvy and aware, savings, fixed deposits, and recurring deposits take a back seat. Most youngsters choose to invest in what gives them joy and fulfillment. Buying multiple properties, cars, and high-end clothes is not a priority while traveling, reading, renting apartments, and self-education are.
Besides, many also focus on investing in real estate, stock markets, and their skill sets that will multiply their income tenfold.
Also, Read 8 Signs you’re Ready To Buy a House.
5. An Emergency Fund Is A Must
As much as we would like to believe that our lives are a bed of Roses and nothing bad can ever happen, it rarely comes true. Since the future is not something we can see, predict or control, it is best to stay prepared to handle any worst-case scenarios.
While making your monthly budget, add an emergency fund to your expenditure list and keep a part of your money in it. Having a stack of cash handy will give you immense security and relief.
Financial stability is important as most of us live paycheck to paycheck. However, what’s even more important is to ensure that your financial health is good. Look out for your monthly expenditure, budget, and savings. Deduct your liabilities from your assets to determine your net worth and your financial health. The points mentioned above are just a starting guide for your long-term financial security.