WHILE going into business during the global crisis might help, a lot still depends on how well you handle your finances. With the right information and proper planning, the task will be much easier. Here are some pointers:
Begin with the end in mind.
This is one of the seven habits included in the book of Stephen Covey. Without the end in mind, no one could start the quest for financial success. “A wise person thinks of tomorrow today. His years of hard work must give a reward which will take care of his needs in the far future.”
Invest in education.
Read books, attend seminars, look for mentors, network, surf the internet for financial knowledge. As the saying goes, “If education is expensive, try ignorance.”
Invest in your health.
By maintaining good health, you can eliminate spending a huge amount for medicines and hospitalization. Imagine how much a critical illness can hurt your finances. With a single stroke, your wealth can be wiped out instantly.
Eliminate or reduce vices.
Vices are one of the greatest hindrances to wealth building. If a person smokes a pack of cigarettes every day, how much money does he burn in a year? Not only that, he also is not investing in his health. In short, vices are not good for one’s physical and financial health.
Live below your means.
Yuppies tend to enjoy the money they worked hard for. That is instant gratification. Sometimes they spend too much that they incur debt just to sustain their extravagant lifestyles. You have a choice—either sacrifice now and enjoy later, or enjoy now and suffer later.
Start a savings program.
The amount of money one sets aside is irrelevant, it is the discipline that matters. The trick is to consider yourself as an expense. Take 10% to 20% of your paycheck, then use the remainder for your expenses. If the budget is still short, look for additional sources of income.
Create an emergency fund.
Savings equivalent to three to six months of your salary must be reserved for emergencies. Once, someone tried to borrow moneyfrom me for an “emergency”: his wife was giving birth. This is not an emergency—he should have prepared the amount needed as soon as he learned his wife was pregnant.
Invest to grow money and outpace inflation.
Transfer your excess money to an instrument yielding higher rates of return. It pays to learn different investment vehicles for your financial growth. Your greatest asset is your unexpired years of productive life. Take advantage of time and make it work with your money.