You love eating. You tend to overeat whenever you visit your favorite fast food joint. This is a bad habit which you just cannot overcome. Overeating leads to indigestion, an upset stomach and later on obesity and heart disease. You have no control over your food habits and you suffer for it. Imagine what would happen, if you cannot manage your finances?
Spending more than you earn is a bad habit. The few ways of spending more than earning, is dipping into your savings, borrowing from others and using credit cards, unnecessarily. Doing this causes significant financial problems. So you should always keep your spending, within your monthly income. The best way to cut spending, is to create a budget and stick to it. Creating a budget forces you to categorize your expenses, into needs and wants. This helps you to learn where you can cut your expenses.
You save what is left after spending. This is not a good idea. You should always spend what is left, after saving. This helps you to save regularly. The best way to save regularly is decide how much you want to save and set aside this amount aside, as soon as you receive your salary. This is called paying yourself first.
Most of the time you delay financial decisions, just because you feel the time is not right, or you feel too lazy. Delaying important financial decisions, can cost you heavily. It’s never too early to make a good financial decision. The earlier you start investing your money, the more money you accumulate over time.
You might have heard of the great saying, “Borrowing and spending is not the way to prosperity.” You should always live within your means. Borrowing money to lead a luxurious life, will lead you to the debt trap. You should borrow money, only if you really need it. Borrowing money to buy a dream home and paying for children’s education is fine. But you should never borrow money, to lead a luxurious life.
Sometimes you delay the payment of your credit card dues and your Loan EMI’s. These late repayments may lead to heavy interest rates charged and it will even affect your credit score. A low credit score may lead to rejection of your loan applications. Always make sure you pay your credit card dues and loan EMI’s on time to avoid late payment charges and to maintain a good credit score.
So spend wisely…Save carefully….Invest smartly. Be Wise, Get Rich.
Under : Financial Planning