In these economically harsh times, people are now required to become more aware of how they spend money. For those who are just starting their career, such as new college grads, it is especially significant that they take steps that can help them endure their independent, brand new life that they will have to face.
Everyone has to go through the phase of having to be independent. However, independence does not only encompass living alone without the parents. Independence also means having to know the fundamental skills required in enduring daily life such as cooking, cleaning, and other chores at home. Similarly and most importantly, independence requires a person to be financially-stable and able to live within his or her means.
This begs the question – How can someone become financially stable?
The road to being financially successful is a tediously long one. Who better to emulate than those who have survived that stage in life. The ones who have flourished amidst the hard times?
So what does it take to take the first step towards financial freedom? Here are three of most important habits of a financially-stable individual that could help anyone financially win in life:
They Spend Wisely
An important facet for a person in becoming financially stable is having the awareness of how money works for them. Being ‘money-smart’ is a prerequisite for those who want to become truly financially free.
But how does one become money-smart?
It all begins with a mind-set of proper allocation. It is pertinent to practice buying only what is needed, as well as spending on things that are only necessary. Nowadays, it is so easy to give in to the “finer things in life.”
Luxuries like the latest gadgets, the finest clothing, and the coolest shoes can actually make a person dead-beat with regard to finances. Similarly, availing luxury services such as a thousand dollar spa or a ten-dollar coffee can haunt a person financially in the end. This is why a person should start to set his or her mind to only spend on things that are truly important.
This is not to say that luxuries in life are bad. The point is that for a person aiming to be financially independent, one has to inculcate a sense of awareness as to how their money is spent.
On another note, financially-stable people are aware of the fact that a person should not spend the money that he or she doesn’t have. Basically, it means that a person should not opt to be extremely indebted to a third party like a bank or a financier.
Credit cards are thought to provide a huge plus in one’s financial self-worth. This is actually a misguided notion because credit cards promote spending, and relentless spending opens more doors to financial roadblocks. Successful people always make it a point to eliminate any debt that may accrue interest. In turn, these accumulated interests can cause huge headaches financially in the long run.
They Save Wisely
The result of spending wisely is having a surplus of money – this is where saving wisely comes in. As any financial coach or expert would declare, saving money is an integral aspect in having a good financial life in the future. Nonetheless, there are some more exciting ways money can be saved, and can even provide profits at the same time.
Banking is the most commonly opted approach in saving money. Over time, money saved in a bank account can accumulate interest. The amount of interest can be noteworthy for people who put a lot of money in their account. However, for people who are at the beginning of their careers, it is difficult to reach that point where the interest gained is of significant value.
It is rare for banks to give out interest greater than 5% on a certain savings account. Naturally for smaller accounts, lower interest is accrued. In this light, an alternative method is opted by those who save wisely; they create more when they use their money for trading in the stock market.
Various firms and companies cater to those who want to earn more money. Money managers use the amassed amount in this way through two distinct means. They can use the money as principal to participate in stocks exchange. On the other hand, mutual funds promise an interest at the end of the year that is much higher than that of the banks. Either way, both are better alternatives to save up and get more from their money.
There is also the option to play in the stock market personally. He or she can buy or sell his own stocks online, giving him an idea of the current money he has. Ultimately, the money gained through this vehicle saved can be used for further ventures such reinvestment or setting up an entirely new business.
They Set-Up Their Own Business
Being able to get a salary after a month’s hard work proves to be quite an experience. However, being able to earn passively takes earning to a whole new level.
Rich guys are not necessarily geniuses or experts in the services their companies offer. They are just really good entrepreneurs, and most of them started as a dissatisfied and restless employee who wanted more for themselves. With the surreal amount of work and the time it takes to finish a certain job, not to mention the relatively lower salary, it is hard to get home and put in the extra effort to make a bigger change.
In more ways than one, people should consider setting up their own businesses to reach the financial freedom everyone clamors for. Though, this isn’t naturally for everyone.
Having a business takes time and effort, too. Entrepreneurship provides control over an individual’s time for professional activities. He or she is his or her own boss, and this alone creates a huge disparity as compared to being an employee.
A person who has his own business can take himself to brand new landscapes, given that he or she is willing to take the risk in business. In this way, what can actually help is integrating a sense of of becoming money-smart in the business.
Money management is the ultimate tool in ensuring a particular business to withstand the test of time. In this regard, an individual who wants to effectively handle a business well should be mindful of the money coming in and going out of the business. Similarly, businesses should take into consideration a proper accounting method to promote efficiency and high level security. MYOB Accounting Software and other online accountancy tools can be the first stone that leads to leaps and bounds for the company.
The world has evolved into an unforgiving place to people who are not financially-stable. This is why it is essential for young professionals to open themselves to success habits of those who have flourished financially. There are obvious schemes which these successful people made in order to go where they are now. Besides, if a person wants to be the best, there is no mistake in imitating the best.
All in all, people should always look forward to being financially independent, while taking small important steps towards a life of true financial freedom.
Being money-smart is a fundamental step towards a great life.