As the world continues down its path a lot of things continue to change around us. One thing that doesn’t change though is money. With most of our daily needs connected to money, it’s no wonder that people are still figuring out ways to improve their financial well-being. In fact, over 43% of millennials aren’t investing in any form.
Lots of people want to learn how to invest, but investing is just one step in the long road towards financial success. The truth is that your financial health is something you have to constantly tend to throughout your life. That’s why it’s important to have a set of ground rules that you can build on as you work towards improving your finances.
These 10 rules are tried and tested, and err on the practical side of things. The important part is making sure you stick to these rules, no matter how mundane it can be—because that’s when you’ll really start to reap the rewards.
At its core, an individual’s net worth is their total assets minus the liabilities. These are the numbers we usually read on Time when they discuss the top billionaires and millionaires of the world.
What these articles fail to share with readers is how the net worth is not necessarily the most stable figure. This number will fluctuate as you purchase new land, put up a business, or loan some cash for a car.
Keep an eye on your net worth, but remember that it’s only a snapshot of where you are at that particular moment. Monitoring this figure can also help you plan out major financial choices down the line.
What a lot of new members of the workforce forget is the importance of savings. Indeed, saving is one of the simplest money habits to have—but also an extremely difficult one to start.
This is where a savings account comes in. A simple strategy is establishing a percentage of your income that will automatically be directed to your savings account.
It should be easy to set one up, and can easily be done by consulting your bank. The important thing is to consistently divert some of your income to that account, which is why direct deposits are a great way to go.
While it is impossible to plan for absolutely everything, it should still be possible for you to create a contingency plan for most financial issues.
As an example, you could set aside a specified amount, say around 20% of your income to float around in case of emergencies. Of course, that percentage will vary depending on your lifestyle and such and will need to be well-thought-out to be effective.
It’s similar to the idea behind the savings account. The difference here is that this targets more immediate needs, and should therefore be a different sum altogether.
With the availability of credit, it’s become much too easy for people to overspend. Let’s be real: those payment plans aren’t making anything more affordable. If anything, all that accumulated interest is going to make it harder on you in the long run.
With that said, it is still best if you can limit your spending to the cash you actually have. Try to live within your means (or perhaps even below) to make sure you aren’t overspending on things you don’t actually need.
As you might have noticed, a lot of these rules revolve around planning. Making a budget plan for all expected expenses helps give you an idea of how much you might end up spending.
Your budget also gives you a ceiling, telling you when you’re approaching dangerous areas of spending. As with saving, budgeting a simple concept that isn’t practiced as often as one might think.
The important part of budgeting is making sure you write all your figures down for easy tracking. You can do this either through a mobile app or on a notepad specifically for expenses.
Similarly, a retirement plan is something that goes unaccounted for when people talk about their life plans. So why are these retirement plans even important?
The thing is, people don’t notice just how reliant they are on their active means of income when they’re working. This type of thinking is flawed and has caused over 25% of American adults to have no money put away for their retirement savings.
It’s in your best interest to start saving up for your retirement. Retirement plans help you maintain your lifestyle when you aren’t working anymore. After all, it is a resource that you’ll need inevitably be falling back on.
Investing provides you with a source of income without you actually working. However, it is important to remember that learning the ropes of investing could take a while: after all, you have to do your research while also having the money to start buying stocks.
Thankfully, the rise of day trading means that investing has become a more accessible avenue for many. There are tons of online resources on getting started with investing that you can check out if it’s something you’re interested in.
Another thing a lot of people forget to take into account is the fact that inflation is most assuredly a thing we have to watch out for.
So with that in mind, keep an eye on any consistent expenditures you might have. These could be simple lifestyle habits that you’ve accumulated: weekend golf, tennis, or even things as simple as beer from the micro-brewery.
The prices associated with these will change over time, either the best or the worst. Keeping an eye on the state of inflation when it comes to these things will help you stay ahead of the curve.
Insurance might seem like just another expense on the surface. However, consider this less of an expense and more of an investment: having your assets insured gives you some peace of mind knowing you have something to fall back on.
If you’re looking to start your own family, an insurance policy also helps safeguard their future since your assets can transfer to them.
Lastly, you best make sure to keep a record of everything involving your finances.
This includes records of deposits and withdrawals to any and all accounts, including your retirement plan or your savings account. With thorough records, you’ll never be confused about where your money is at any point in time.
The road to financial stability is all about constantly learning and adapting to the situation. To learn more about growing your money and establishing sustainable money habits, reach out to us at AnyCredit today!