One of the best ways to get wealthy is to be able to allocate and manage your finances well. This is called as financial smartness. If you think about it, wealth in any country is only focused on a small part of its populace. And by wealthy, I mean people who meet their financial needs while having more to save at hand. Sometimes, being rich is not about how much you earn, but how much you save. It’s all about managing your personal finances. So how do you do this?
- Live below your financial capacity. Spending all your income this month just because you know you’ll have income again the next month is not wise. Try to keep a standard of living well below what you can afford. That way, you’ll always have extra cash around. Doing this will make you wealthier and smarter than those earning more than you.
- Plan and strategise. Plan and set targets to help manage your personal finances. Take a break everyday for five minutes and think of a new way to save money. And then develop a budget that will help manage your expenses. Stick to it religiously. Next, visualise a financially free lifestyle you can enjoy 5 to 10 years from now to motivate yourself. And don’t forget to reward yourself whenever you hit a financial milestone because goals are meant to be celebrated!
- Broaden your horizons. As you strategise, look at stocks you can invest your money in, real estates or even to start your own business. They are not necessarily the same things but you can always try to mix them up and find out what suits you most. Find out what you have a strong interest in, because doing what you love will drive you to greater success.
- Use less credit. More and more people are driving the credit card society, but don’t get swept away with the apparently sweet deals. Think carefully whether you need a purchase or not, especially if it’s extravagantly expensive. Bear in mind that giving discounts is a business strategy. While it may seem like it is saving you money, it might actually be burning a hole in your pocket! Paying in cash is always your best bet. If you can’t afford to buy something, don’t buy it. It’s just as simple as that.
- Stay liquid and promote cash flow. The best part of being wealthy is being able to do what you choose. Of course, you can only do this when you have enough money. So how do we define ‘enough’? It can be believed that having three years’ worth of savings to pay for your current lifestyle is ‘enough’. Save up to reach your target and always be cash ready.
- Get your family involved with personal finances. If you are saving up for your family or plan to start saving, always give them an idea of your current financial state. Get them involved in your saving schemes and business plans. Promoting cooperation and participation is better than doing it alone.
Staying on top of your personal finances is the key to being wealthy. It’s not about being stingy or withholding luxuries to the point of being miserable. It’s about living within your means and saving up for the future, while still being able to enjoy your life today.