Personal finance is one of the many important lessons that you are not taught in school. Being rich and wealthy depends a lot more on your financial habits than the amount of money you make.
Let us look at 15 financial habits that will make you wealthy and prosperous.
- Pay Yourself First - One of the first rules of being rich is ‘A part of what you earn is yours to keep.’ Set aside at least 10% of your income each month in an investing fund.
- Make a Budget - A budget is simply a plan that you make for yourself to pre-decide how much money you will spend on what. It is a tool that will help you keep your spending in check.
- Protect Your Wealth - Protecting your money from inflation or bad investments is just as important as earning money. If you have parked your money in an investment instrument with a lower return than the current rate of inflation, then your hard-earned money is getting depleted.
- Set Priorities - You will always have to choose where to spend your money. If you spend some time thinking about what comes higher on your priority list, you will consciously allocate your cash instead of randomly spending it due to the lack of a plan.
- Invest Wisely - There is no one rule when it comes to investing your money. Understand your risk appetite and invest accordingly.
- Be Frugal - Being frugal does not mean not spending money on things you want. It means being careful and smart while spending money and making sure that you do not overpay.
- Keep Track of your Expenses - You cannot manage what you cannot measure. Get an expense tracker and understand where your money is going.
- Set Financial Goals - The power is goal setting is enormous. A person who has a clear idea of where they want to go is much more likely to get there than one who has no clue.
- Say No to Debt - Falling into a debt trap is never going to let you get rich. Avoid taking a debt unless you have a good enough purpose and a clear plan to pay it back.
- Avoid Using Credit Cards - Personal finance is all about living within your means. Using a credit card means spending borrowed money, which goes entirely against the principles of wealth accumulation.
- Maintain a Good Credit Score - Check your credit report at least once a year and make sure it is error-free. Maintaining a good credit score is going to help you negotiate better interest rates from your banker.
- Automate your Investments - To avoid missing out on investing in any given month, enrol in a SIP that deducts and invests a fixed amount each month as soon as your salary comes.
- Read About Good Financial Habits - Getting rich is all about learning and practicing good financial habits.
- Get a Finance Buddy - You are much more likely to stay consistent on your financial freedom journey if you take it with a friend.
- Be Patient - A large part of personal finance is about being patient and not letting your emotions take your financial decisions.
If you understand the rules of money management and use them for your benefit, no force in this world can stop you from becoming wealthy.