Leading a better financial life is a matter of choice. Sure, people living from paycheck to paycheck and experiencing a significant financial setback probably wouldn’t agree with this statement, but regardless of the scenario, there’s always a chance to do better. With that in mind, here are the top five things you can do today to start leading a better financial life.
Manage debt
Properly managing your debt is the most important part of leading a healthy financial life. First, you want to learn the difference between what you need and want. Most people get in debt over trivial matters like buying a new TV (only slightly better than the old one). In other words, they are living beyond their means. So, avoid this and learn a few strategies to repay your debt early. You can overpay, consolidate, focus on smaller debts first, and much more.
Reinvent your investing
A lot of people misunderstand what it’s like to invest. They believe they’ll spend hours researching stocks and have a moment of epiphany when they uncover the “ONE” investment that will make them rich. This is not how it works. The truth is that you’re making small, diversified investments and trusting specialists running your investment fund. You also need to decide whether you’re in it for the passive income (dividend), long-term yield (position trading), or want to trade (day trading) actively. Aside from this, there are so many investment strategies that you should read about.
Set a fraction of investment money for high-risk, high-reward
Some investments have an opportunity to explode. Just think about buying Bitcoin in 2015.
How much would you make if you invested just a few hundred dollars then and sold at $60K in 2021? Would it be risky? Sure, however, you would still risk only several hundred dollars. Depending on your total net value, you can set aside 5% to 10%, while some even go as high as 20%. Regarding this, you should focus on the figures and not the percentages.
Have an emergency fund
Another thing you may want to do is start an emergency fund. The simplest way to do this is to automate your savings by going to your bank and requesting that they transfer a part of your income (a set part) monthly into a different (savings) account. This can be done; all you have to do is ask. Ideally, you want to set aside three to nine months of your expenses here. This way, in the case of a loss of a job or some other disaster, you have something to fall back on.
Budgeting and self-restraint
To take care of your funds, you must understand how you spend your money. If you don’t get your spending under control, you’ll never be able to outearn your lifestyle. One of the simplest ways to get there is to download a budgeting app.
This way, you’ll get real-time updates on all your expenses, and at the end of the month, you’ll be able to see exactly how you’re spending your money. For instance, an average American worker spends an average of $14.40 weekly, almost $750 yearly.
Increase your financial literacy
The main problem that many people face in the financial world revolves around financial literacy. Consider this perspective – without a grasp on concepts like credit scores, prudent credit card utilization, and determining a reasonable APR for loans, your options may be limited. This is especially relevant when considering topics such as caravan finance and loans. However, today, with a smartphone and an internet connection, you can access all of this information in a matter of seconds. Sure, you won’t be a financial expert, but you’ll grasp the basics, which is sometimes more than enough.
Being smarter with your money is always the way to go.
So, by following these five tips, maybe you won’t drive your Lamborghini across Ibitza, but you won’t struggle with as much debt as you did last year. By managing your debt and learning what to do with this newly found excess money, you’ll create a platform for future affluence. Also, by continuously learning and restraining yourself when it comes to spending, you’ll make all the difference in the world.
