We all dream to be wealthy without truly understanding the notion of financial well-being. Most of us equate saving money with good personal financial habits. So, does that mean the first step to being wealthy is to be stingy? Or to accumulate assets? The article tries to knock down all these myths by covering 7 financial habits that will make you rich.
Personal Financial Habits that will Make you Rich
1. Change Your Thinking
The first step that will make you rich is to learn money is not made in a day.
There are no shortcuts to earning money. Many stories are doing rounds on the internet that speak stock trading is the simplest and surest way to get rich; there is a lot of hype around Bitcoin, cryptocurrency, etc.
Amidst all this, understand that investing is a serious affair that needs effort, perseverance, time, skill, and attitude. Don’t make ignorance a virtue.
2. Learn The Ropes Of Investing
Investment is an umbrella that includes different instruments. Every investor should have an investment objective before plunging into it.
For example, you have invested the money in the Provident Fund or Fixed Deposits. You may even add VPF to it. And resist drawing money or taking a loan.
You try multiple ways to keep the investment secure. However, after maturity, you might get disappointed by the suboptimal returns.
It is because you selected an income instrument that is not growth-oriented. The idea is to learn the ropes of investing by gauging your investment objective.
Depending upon your income, and proficiency, there are a lot of investment alternatives available. But ensure that you don’t give up too easily on saving the money.
Related – 6 Easy Ways To Start Investing With Little Money
3. Don’t Neglect Retirement
Even though you make a financial plan for the future and decide to save the money, you need to identify retirement goals and stick to them.
At some stage, you might see it as an unimportant goal or tend to deny it, keeping other goals in mind. Most parents keep their children’s education and health well-being goals ahead of their retirement goals.
They think retirement is a distant goal and don’t save money early enough.
Retirement matters as much as your child’s education goal. So, if you want to end up being rich, start saving money for retirement.
Related – How Much Money Should You Save Each Money? 7 Savings Tips
4. Reduce Credit Card Debt
Create an action plan to reduce and eliminate credit card debt. A good way to do it is to evaluate different repayment options:
- View your credit rating report– A good way to reduce the debt is to view your credit card report, check if it is accurate, and see which account is dragging the report rating down.
- Negotiate– You can negotiate it with the lenders and ask them to make concessions.
- Debt consolidation– Another way to reduce credit card debt is to consolidate different debts into a single, low-interest rate. It will make your payments more manageable or reduce the payoff period. There are several ways to consolidate the debt, including balance transfer cards and taking personal loans.
- Learn the repayment strategy– Before winding up your credit card debt, you need to learn and evaluate the repayment strategy. There are two methods to pay the credit card debt avalanche and the snowball method. In the avalanche method, the user has to pay debt with high-interest rates first, and the other is to tackle the lowest rate first and then start with a new loan.
- Automated payments- Automated payment is an easy way to make credit card repayments on time. This strategy works.
Related – How To Use A Credit Card Wisely: Top 10 Tips
5. Learn the Approach to Saving Money
Cutting down some random expenses will not help you to accumulate or save money. The thought process needs to be revamped.
The first way to save money is to keep track of your expenses, including your daily household expenses or the mortgage loan.
Once you know where your income is drained, the next step is to create a budget. The budget will outline the income and expenditure in a tabular form.
The third step is to identify the non-essential expenses and trim them. Now, set your saving goals, pick up the right instruments and now watch your savings.
6. Think before Investing
Since the market offers us so many choices we can become mindless when choosing them. Worse, we put inertia over action.
The idea is to select your investment carefully, pondering over the merits and demerits. Don’t question your decision often, and don’t aim for perfection.
Have patience in your investment process.
7. Do not Rearrange your Financial Objective with the Arrival of New Products
Another financial habit that will make your investment growth is not rearranging your financial goals, fearing that the market has changed drastically.
- There might be fancy financial products that may lure you to higher returns or
- There might be new theories doing the rounds
Consider the trends but have a broad framework before starting to invest.
Wrap Up
These are some financial habits that will help you grow rich, but in this process, be kind to yourself and do not assume that you are not doing enough to save money.
These are habits that you need to work on till it becomes part of your nature. Don’t give up soon.
