8 Financial Habits You Must Implement
Your financial situation is directly related to your attitude towards money. The way it is earned and spent is what brings you to the financial situation, good or bad, that you have today. In short, it is the financial habits that determine your current financial status.
This article provides tips on good financial habits that you should implement into your life to improve financial situation.
1) Saving money in order to invest it
As we all know, the usual way to get income is through a salary. With a paid job, individuals exchange hours for money. But with this method, you won’t get more money and will never get rich or get financial freedom if you don’t do anything else.
So the idea is that you set aside a small amount every month and generate more money out of it. For example, you invest the money and earn a passive income with that investment.
But of course, to start investing you will first need to raise capital with the small amount you set aside. Maybe at first, you think it’s not worth it because you can only set aside a little and you won’t be able to invest for months. The important thing here is the habit.
Habits take time to establish and you need to repeat it every month so that it seems normal. And when you fix it and have that first capital to invest, you will have the satisfaction of seeing how it begins to generate passive income.
Therefore saving is the first habit you must implement. If until now, you did not save anything, you must save to have emergency fund and also to invest.
2) Eliminate bad debt and avoid falling into it
Bad debt increases the amount of expenses you have to pay every month.
It is important that you should not get into bad debt. But in case you are already in debt, you have to draw up a plan to get rid of it. Keep adding more money to the debt repayment in addition to the minimum amount and get rid of it as soon as possible. In your budget, add this amount as an expense and force yourself to reserve it every month. No excuses.
Good read: Good debt and bad debt
3) Get financial education
Establish the habit of reading about finance, attending seminars, watching documentaries, knowing terminology, etc. In order to succeed, you need to know the rules and basic terminologies. If you don’t know what an asset is, you will hardly be able to acquire it. Getting into the world of investments, without proper knowledge, guided by the opinion of others who are not the right people, can worsen your financial situation.
You need to know how to use money, how to make it work for you, instead of working for it and others. You should be able to differentiate between tips that benefit you and those that benefit others without providing you with any/less benefits or even harming yourself. For all this, having financial education is the key.
4) Understand the risks and be able to control it
Investing has its risk but acquiring financial education minimizes the risk.
Parachute jumping also has a risk, but you can control it, if you learn how to open the parachute and practice before actually jumping out. The purpose is to enjoy the jump, minimizing the risks.
The same fundamentals can be applied in finance. When you know the game, you enjoy it and the risk, although it still exists, you know how to control it.
It is necessary to be determined to achieve the goal of “financial freedom”. Determination will give strength to move forward when problems arise.
Those who get rich are very clear about their goal. They draw up plan, adapt it according to their needs and do not cease efforts. Basically they are headstrong and thanks to the perseverance with which they achieve what they want. They leave the comfort zone and open their own way. You must be brave and move forward with your goal.
6) Knowing how to wait. Have patience
Getting financial freedom takes time. You won’t get it overnight unless you win a lottery or have ancestors money. Because if you have no financial education, the way money came in, will go away.
So depending on your circumstances, achieving financial freedom will take more or less time. Be patient, have perseverance, and definitely you will achieve it.
7) Look for a role model
Get inspiration from people who have achieved what you want, find out how they have done it and imitate them. Don’t reinvent the wheel.
Nowadays, with the internet, it is very easy to follow people who can inspire. Follow people who publish their profits and see that they are honest and understand what they are doing and how they are doing it. If you want to earn from investments, find out who is already doing it and understand how they do it. Don’t invent anything. It’s very rare for you to come up with an idea that no one else has. If no one is doing it, it’s because it’s probably not a great idea, even if you think so.
8) Accept responsibility for your financial mistakes
Don’t blame others for your financial mistakes. If you have gone into bad debt or losses or paid money to someone and never got it back; be aware that you are solely responsible. Important thing is that you should learn from it. Mistakes are the opportunities to learn and improve. Use them to your future advantage and not against you. Recognize and learn from them.
If you are truly determined to change financial situation, you must adopt habits aligned with your goal. Achieving financial freedom is not an easy task and requires discipline. If you really want financial security for life, you must change financial habits as it takes time and discipline. There are no shortcuts.
Hi, I am Nikesh Mehta owner and writer of this site.
I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.