Being financially stable is excellent! It brings peace of mind, protects your mental health and allows you the freedom to do the things you like.
Money touches every aspect of our life, and it is beneficial to develop a great relationship with money. Having a stable financial life can help you retire on your own terms.
This article will share five money habits you should practice to keep your finances in order.
1. Budgeting is Everything! [The Cash in Envelope trick]
Budgeting is always the first rule in finance!
This is because it provides financial stability. With a budget, you can pay your bills on time, save for emergencies, and make significant purchases like a car or home.
A budget provides ‘guardrails’ that help you control your income and expenses, strengthening your financial foothold.
Using the Cash in Envelope trick is a great way to stick with your budget. You put cash in different envelopes based on your budget categories. The system ensures accountability as you don’t spend more than is allocated in the envelopes. Don’t use this system for fixed expenses like savings and mortgage payments.
2. Why stick to one source of income when you can do multiple sources?
Multiple streams of income give that extra financial security.
Because the current economic climate has shown that no job is safe, having more than one income stream can help us spread our bets and ensure that we’re always financially covered.
It is also a faster way to build wealth as you have more money for your expenses and more money to invest. We would advise you to create income sources to delegate to others. Just so you don’t get swamped.
As much as we might like to disagree, good financial habits are not maintained via sheer willpower. Automating your finances helps build good financial habits and ensures you do not deviate from your plan.
According to a personal finance reporter on Wall Street, J.J. McCorvey, people throw up their hands and abandon their savings goals and other financial milestones they are attempting to achieve. As a result, automating those decisions can assist you in staying on track with your finances.
Paying fixed expenses like bills, savings, and investments should be automated.
4. Invest in your financial education.
Personal finance is a topic that should be assimilated into our educational systems. Unfortunately, this is not yet generalized. However, several organizations and communities are focused on improving financial literacy.
Research some of these communities, pick one that aligns the most with your values, and register to join.
Books are another way to develop your financial literacy. You should inculcate books about financial freedom into your reading list. Check out some of these books here.
Smart Money Woman is one of our favourites.
5. Having an Emergency fund is vital!
If you don’t have an emergency fund, you’re at risk! Your emergency fund protects you in the event of a financial setback and can help you avoid going into debt.
An emergency fund can keep you from making bad decisions, like borrowing, when an unexpected occurrence, such as losing your job or a major financial cost, happens.
Include the funding of your emergency wallet into your monthly budget and continue padding it. You never know what surprises life might bring.
We frequently create content that you’ll find helpful! When we’re not doing that, we’re interviewing inspiring Leading Ladies eager to share their experiences with us!
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