5 Habits To Develop Financial Stability
Just like any goal, getting your finances stable and becoming financially successful requires the development of good financial habits. Although it may seem complicated at first, taking a systematic approach can help you build habits that will benefit you in the long term.
Here are 5 habits you can adopt to lead a financially healthy life.
1. Keep Tabs on Your Spending
Think of your early years of handling money: the time you started your career and kept a close watch on your spending habits. Well, now you’re a few years in and you may have lost the habit. Here’s how you can keep things in check:
1) If you don’t know what is essential and what isn’t, the best way to find out is by starting to track your expenses. This is a lot easier now since Indians are slowly adopting payments made electronically. Of course, don’t get obsessed about it; it’s okay to check your expenses even just once a month.
2) If you’re having trouble doing this proactively, you can use an app. There are many that can track your expenses and send you transactional messages and emails.
This will give you a better understanding of where your money is going, so you can keep yourself accountable and figure out what you can save on. It can also help you notice if you’re being lavish in your spending.
2. Set a Plan and Stick to It
The basic point of a budget is planning, not confining. If you want to make the most of your money, which is basically what personal finance is all about, then you need to plan for things:
1) Plan how much you’ll spend each month, based on what money you have after setting aside your savings. Do not exceed this budget.
2) Plan things like large purchases and account for unexpected expenses like a hospital visit or a punctured tire by adjusting your budget or dipping into your savings.
3. Automate your savings
Automated savings is the trick to growing that pot of money. Putting it into a separate bank account stops you from spending money that you intended for your savings account and by automating the transfer you’ll 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.
4. Never miss monthly credit card payments
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.
5. A contingency fund
At all times you must have some money ready to meet any unforeseen expenses. In the absence of such a fund, you may have to resort to a quick loan from the unorganized sector, which can cost you dearly. Or you may have to liquidate your assets, often at a lower price due to the panic sale. You can also prepare for such eventualities by opening a Fixed Deposit or a Recurring Deposit.