Returning from the holidays, one of the things we religiously practice till at least the end of the month is money management. And while it is a good idea to keep 'December money' aside, your money attitude throughout the year has more impact on your finances.
To improve your financial well-being and discipline this new year, here are eight money rules to keep this year. This post is directed at individual finance, but a little brush up here and there, and you can apply it to your business too.
Rule 1: never spend more than you earn. It is easier to get into debt than recover from it. And people actually spend the rest of their life repaying debts.
Rule 2: gradually save up for big/major expenses rather than take them out of your earnings at once. It takes off the financial strain and allows you to do multiple things gradually and together.
Rule 3: a percentage of your income is yours to keep. This is not saving towards anything; just keep it for yourself. Also, it doesn't have to be big, just set aside a percentage monthly.
Rule 4: have a budget. Plan how you want to spend your money so you don’t miss the most important things you need. And the second part of this rule is to stick to your budget.
Rule 5: Invest. if you can't afford it at once, save towards the investment. But investing is a great way to increase your earnings. This brings us to the next rule...
Rule 6: your income must steadily continue to increase. This could mean changing jobs, acquiring a new skill, introducing a new product, or even starting a new business. Whatever applies to you, the result should be a steady increase in revenue. Remember, your bills and responsibilities will continue to increase.
Rule 7: have short and long-term financial goals. As you save for your house rent, don't forget to save for building your house. As you save for the holidays, don't forget to save for retirement.
Rule 8: never borrow more than you can pay within a year. Especially when it comes with ever-increasing interest. If you have to borrow, work out a payment plan that leaves enough to sort out essential bills so you don’t end up in an endless cycle of borrowing to pay back.
Keeping these rules boils down to two things -the goals you have set for yourself and the discipline to stay on track. It is not an easy journey, but it is a journey that holds immense benefits for your financial well-being.
Cheers to making healthy financial choices this year.