Tuesday, April 14, 2015

Be Financially Healthy with These 7 Money Habits

Being financially healthy usually means having sufficient income to cover for daily expenses for the rest of your life without having to make loans or be in debt in order to get by every day.
There are people who achieve this by developing useful money habits which can be seen through saving and investing over many years. Others become successful enough that their investment can generate income without daily supervision.

There are many different approaches to becoming financially healthy and can be taken by average Americans.

Photo credit: financiallyeliteblog.com
Here are wealth generating money habits that can make you financially healthy even during retirement:

1.       Avoid consumer debt when possible
Consumer debt is one of the leading causes of financial ruins. Using your credit cards to pay for daily expenses, but carry a balance, is equal to paying way more than the amount of what you bought.
Creditors use money-generating tools such as:

·         Credit cards
·         Payday loans
·         Car loans

These are examples of money-generating tools for creditors and the first step toward a better financial health is to learn how to manage the proper usage of each tool and by getting rid of high interest debts.

2.       Stop trying to keep up with other people

One of the many sad and impractical reasons why we spend so much money on things we don’t really need is because we keep on trying to keep up with other people.
We sometimes forget the real reason why we get up every morning to go to work and instead we sulk and ask ourselves how we can get what other people have, which is not really important.
Some of us forget that a modest home and car will work just as well, but instead we stress over things too much even when it does not really affect us in any way.
We need to see past TV commercials and remember that we don’t really need much to get us by. While other people are falling for new cars or boats, we need to focus on building up our finances instead.

3.       Spend less until it hurts

It’s true that part of saving up is to spend less, however you need to know what you can sacrifice to become financially healthy.
Only you can tell what you can or cannot live without. To make it simpler, try starting a list with the basic necessities in one column and your ‘wants’ in another. You’ll be able to identify what you can live without and put the funds for your ‘wants’ into your savings instead.

4.       Put yourself on top of the list

What is this ‘list’ that we need to put ourselves on? It’s a list that may consist of:

·         Utility bills
·         Groceries
·         Rent

You need to put ‘retirement’ on top of your list. It may sound selfish but in truth, you’re still following the third money habit of spending less.

It encourages you to live on a smaller budget since your money is already predestined to go somewhere and it’s a powerful saving habit.

Funding an employer-sponsored 401(k) plan is a great way to get started. The contribution is deducted right out of your paycheck; you won’t even realize it. Living with what’s left after paying yourself is a great way to develop this money habit.

5.       Invest on income generating assets

From all the other money habits that you need to adopt, learning about income generating assets will secure your financial health even during retirement.
You need to invest your money in assets that will generate income and appreciate through the years. Focus on buying assets that will make money instead of depreciating into a pile of junk.
Investing in stocks, despite the ups and downs of the stock market, or properties has helped investors build wealth.

6.       Continue investing

It’s important to continue investing over the long term. Aside from investing in stocks, you can also invest on insurance such as life insurance or long term care insurance.
From the other types of insurance, life insurance and long term care insurance have higher chances of getting used. One will provide financial security for your loved ones while the other will help you pay for expensive long term care costs in your late adulthood.

7.       Learn to adapt

Lastly, with all the other money habits you need to develop is being able to adapt to whatever situation you will be in. the way you spend your money today is going to directly affect your future’s financial health.
There will be times when your ability to adapt will be tested and such times may include:

·         Losing your job
·         Emergency in the family
·         Unforeseen fluctuation of prices

You will need to adjust and think fast. If you lose your job, you need to cut off extra expenses to make your funds last. Having a part-time job ready in case of a stock market drop will save you and your future savings. Being adaptable means you’ll always land on your feet and live a less stressful life.

You're not aiming for millions to achieve basic financial independence for yourself right now. Anyone can take follow these habits to become financially healthy.

Having enough income to cover your living expenses without having to work full time can free you up to actually enjoy your life instead of remaining on a treadmill of working and spending.

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