Personal finance is a vast topic that intimidates a lot of folks.
That being said, it is extremely crucial to have a sound knowledge of personal finance strategies in order to live worry-free in the uncertain world that we inhabit.
As Benjamin Franklin, one of the Founding Fathers of the United States said,
An investment in knowledge pays the best interest.
Navigating this labyrinth of personal finance is no mean feat.
But with a bit of dedication and discipline, you can go a long way in creating a better life for you, as well as your loved ones.
The challenge that most people face is – how do I stay in sound financial health?
Questions on financial topics abound – some want to understand derivatives, others want their credit score explained.
It’s all dizzying!
Well, I have good news.
Let me tell you, the recipe of the financial health secret sauce is hereby revealed.
Read on to learn more about all the budgeting secrets that will help you improve your financial health:
Keep track of your expenses.
Page Contents Table
It’s easy to look track of your expenses, especially with the ubiquity of digital payments. But not keeping track of your expenses could be financially devastating.
- Make use on an online payment tracker for all your debit transactions
- Periodically review your top expenses
Plan for the expenses coming up
If you know for certain of any payment that has to be made some time from now, it is wise to plan well in advance.
This saves you the needless panic that is best avoided by some clever thinking.
- Write down an approximate amount of the upcoming expense
- Make provisions accordingly
Invest for the long-term
If you are a young professional, it is easy to be swayed by your youth and forget to save for retirement, since it seems too far away.
Now that is one big mistake!
Age catches up faster than you think and to have a comfortable life, you must plan ahead.
- Imagine how you would want your retirement to look like
- Save small amounts regularly
Stay away from get-rich-quick and easy schemes.
There are plenty of people out there – both real and in the virtual world – waiting to rip you off of your hard-earned money
One rule of thumb – if something seems to be too good to be true, it’s because it probably is.
- Read all the terms and conditions of any scheme that you wish to participate in
- Stay away from such schemes that make grandiose claims on returns
Do not put all your eggs in one basket.
This is to say – diversify, diversify, diversify. It is not prudent to invest in just one instrument.
Always look to invest in multiple financial pools, so you are not overly dependent on the successful returns of just one.
- Diversify your investments based on how much risk you would be willing to take
- Scour the internet for the best options available today
Avail the services of a financial consultant
While it may be tempting to just “DIY” when it comes to financial choices, the world of financial planning is vast – this is why financial consultants are needed.
These consultants are experts within the field and will always guide you in the right direction – unlike untrustworthy sources on the internet or a WhatsApp forward.
- Pick a trusted financial consultant who is well-recognised and highly experienced
- That being said, do not become overly dependent on the consultant’s services
Be grounded in your own reality.
Too often, people depend on others’ budget templates which generally does not reflect their own spending habits.
Maybe you spend more on personal hygiene than on gadgets, or maybe you don’t.
The point is, your spending is unique to you, and it is best to put in the effort to create your own template.
- Take out some time to understand your spending habits
- Create a template that can be consistently followed without having to update it too often
Analyse the consequences of failure
Budgeting is crucial for two reasons:
- It saves you from financial ruin
- It sets the foundations for a prosperous future
This means that you must vs prepared to face the music if you do not stick to financial discipline.
- Take some time to think about how your life would be impacted if you do not reach your goals
- Take a cue from those who have suffered the consequences of financial indiscipline
Maintain a good deal of flexibility
Your budget does not necessarily have to be such that it makes you depressed and exhausted, trying to stick to it.
Life is uncertain, and things change. It is also important that your budgets allow a fair bit of flexibility.
- Decide well in advance how much flexibility you want to allow in your budget
- Try not to stretch your budget too much
Identify your habits and attempt to change it.
There goes a saying – old habits die hard.
Nowhere is this truer than in the world of budgeting.
Your expenditures are largely a consequence of your lifestyle choices and habits that you have not reviewed in a very long time.
Even small, subtle changes in your spending habits can make a huge difference in maintaining optimal financial health.
- Keep working towards your goal by rewarding yourself when you stick to your decision
- Ask a trusted buddy to warn you when you stray
Not only these, but there are plenty more ways that you can budget in a way that ensures you stay in great financial health.
- Set small, easily achievable goals
- Check your credit score and avail of other benefits through credit club login if you so wish
- Keep setting the bar higher
- Stay away from frivolous and impulsive spending as much as possible
- Keep pushing even if you stumble; it is never too late
At the end of the day, your future is in your own hands.
It is up to you what you make of it.
So go forth and may success be yours!
James is a business editor who writes about various topics such as technology, health and finance. He works along with the colourful folks that build a nation through tech startups. He is also a professional football player and video games enthusiast.