4 Positive Habits To Develop Financial Stability
While money doesn’t buy happiness, it sure brings a sense of stability into our lives. It’s what we all need at our disposal to ensure the realization of our goals, and desires while allowing us more peace of mind. The first step to creating and growing wealth is financial discipline and stability. Wealth creation is not just for the rich, the financially versed, or professionals only. You can enable that for yourself too. This blog will take you through some of the good financial habits you can begin to build immediately to benefit you over the long term.
Track your spending meticulously
Think of your early years of handling personal finance: the time you started your career and kept a close watch on your spending habits simply because your paycheck was small and required hard prioritization. A few years in and you may have lost the habit. An obsessive tracking of each spend can seem like a hard habit to practice but is one that pays off in the long term. It allows you an insight into your spending triggers, impulse purchases, and non-negotiable month-on-month expenditure. There are plenty of apps available online which streamline the process for you.
Automate your savings
Automated savings is the trick to growing that pot of money. Putting it into a separate bank account and limiting your access to the account when you are out and about stops you from spending the money that you intended for your savings account. By automating the transfers you will stay consistent without even having to worry about it. You’ll also get a buzz every time you look at the balance in your savings account which is so motivating. A Systematic Investment Plan (SIP) is a good option for the same.
You can invest a small sum on a regular basis in a mutual fund scheme of your choice. By starting in a SIP, an amount is deducted from your designated bank account on a monthly period, which will get invested in your preferred mutual fund.
Dissolve the habit of delayed payments
Whether it is your credit card bill payment or monthly EMIs, delaying payments is a negative financial habit that you must work to eliminate from your system. Not only does it affect your credit history but also disrupts your financial patterns. Make sure you always keep on top of your credit card payments, whether it’s the minimum payment because you have some debt or paying it in full. Achieving financial stability includes maintaining a positive credit score. And if you do have credit card debt, try to come up with a debt repayment plan to clear this off so you can start to save those monthly payments instead of putting them towards debt.
Setting up contingency funds
Not having a stable saving to fall back on in times of unexpected emergencies means diving for new loans or credit cards. This serves to destabilize your financial goals over the long term. It is also common for people to take desperate measures in the absence of an emergency fund. This means you may end up paying a much higher interest and unfavorable loan term agreements. Another alternative in such cases is to liquidate your assets, often at a lower price due to the panic sale.
Following the 50:30:20 rule will help you manage your expenses better. This gives you clarity on the exact amount you need to keep aside for your unavoidable expenses, for the things you enjoy spending money on and on savings.