Wealthy people that have made it in life live by different money principles. These principles have helped them to be financially woke and make sure that they maintain their financial status.
If you have been wondering why the rich keep getting richer by the day while you don’t seem to not make any progress in your finances, then it’s time to revaluate your life and follow certain principles that have been proven to be realistic and worth a try.
As hard as it is to keep money in your pockets, in this article I will be listing 10 principles that will help you spend wisely and making your money grow as you grow older.
1. Live within your means
One of the best rules you need to abide by for you to be money savvy is to not spend more than you earn/make. In simple terms, learn to live below your means so you can maintain your lifestyle and still have money left to save for rainy days. This means that you cannot be buying everything that you afford just for the sake of you have the means to do so. Affordability doesn’t give you the green light to go for it because doing so can have an effect on your money – exhausting your funds, savings, and your future. You can download applications such as 22seveven and NerdWallet: Personal Finance & Money Tracker that will help you manage your money well. These apps will help you track your budget and spending, offering you the right steps to follow to achieve your long-term goals.
2. Organise your finances
For the above-mentioned applications to offer you the best service you require then you will have to organise your finances accordingly. Have a list of all your credit cards, personal loans, bank accounts, car and house loans, and retirement account so they can be easily tracked.
3. Invest
Make your money work for you by making the right investment. There are so many ways to invest, it is all up to you and what you aim to achieve. You can invest your money in any JSE listed shares or any other investment that will gradually grow and yield positive results in the next five years. You can choose if you want a short- or long-term investment, most importantly, invest only in what you understand.
4. Understand risk
Before you make any investment, please do a thorough research of your intended move, and understand that it could either go sour or sweet for you. It is good to also know that the more you risk, the better your chances of a good return. Yes, no one knows what the future holds but, that should not stop you from making big money moves, invest wisely.
5. Limit your debt
Avoid debts as much as you can. Only buy something on credit when it is necessary to do so. Having a credit card is not a bad thing but, you need to be a smart spender as, spending beyond your means can lead you into a huge debt that you may struggle to pay, leading you to be blacklisted of which might affect your credit score. If you are already in debt and trying to get back on track, then you should know what your rights are when you are in debt.
6. Keep on learning
Learning does not stop. Each day you can learn something new about money management. So, continuously feed your mind with new financial knowledge. This will help you to make calculated decisions before you put your money into anything. You can learn a thing a two from analysing stories of people that once tried and failed, this will help you to know what works best.
You can also invest in your education – spending your money on something that will increase your expertise.
8. Plan for the unexpected
There will always be unforeseen emergencies and it is best to always plan ahead. You can do so by having insurance that can help cover the costs of unexpected accidents or damages. You can now get insurance for little things such as your phone, house appliances, house, car, and anything that can be covered by the insurance companies. You can visit sites such as Hippo to compare some of the available insurance.
9. Avoid the “get rich fast schemes”
If it sounds too good to be true, run. There are a lot of scams out there that promise people extraordinary returns. Be alert, don’t be too naïve and greedy by putting your money on such pyramid schemes as you might regret at the end when all your investment is gone with no return or trace of the people you gave your money to.
10. Look at the bigger picture
Have a long-term financial goal to track your progress. It is important to know when you will pay off all your debts, when you will be able to buy the car/ house you want, and most importantly have a clear picture of how your life will be after you retire.
Financial management is all about establishing a habit and getting into a routine at a young age. This will help in securing your financial freedom at an early age. If one gets used to saving at such a tender age as 18 then as life gets more complicated, trying to make your way through independence, then putting some of your earnings into your savings account won’t be a difficult task. This should be a financial lesson you teach your kids so they learn the value of money and get in the habit of saving as little as they can from a young age.
The financial bunny “Nicolete Mashile” has a Youtube channel, FinancialBunny Tv wherein she offers great financial advice – best simplified and easy to follow. You can check it out as you start your healthy relationship with money.