When it comes to the financial aspects, it is important that every person must play the role of a strategic borrower, prudent investor and meticulous saver. Any mismatch of proportions in these roles everyone must play leads to chaos in the finance aspect of life. Let us have a detailed look at ways to successfully play all the three roles in the most efficient manner.
Be a meticulous saver
Let savings be your first expense every month. Savings, in reality, is not considered as an expense. However, when we decide to save the left over amount after meeting all the expenses we incur every month, our savings remains a meagre one. Focus on savings at all points of time keeping your eye on controlling your expenses where ever possible.
- Saving a minimum of 30% of what you earn every month is the key to build wealth
- Learn to anticipate future commitments and separately save for each one of them in a prudent manner
- Staying within your comfort zone will not help you earn more or build wealth
- When your earning capacity increases, ensure you save more.
- Cost saving is easier than cost cutting since the latter requires you to sacrifice on certain aspects while the former teaches you to be disciplined
Be a prudent investor
- Building assets in a gradual and steady manner helps settle down in life quicker than the larger chunk of people who fail to do so.
- Build a Proper Investment Portfolio based on life goals after hiring an Expert Financial Planner at an early stage in life. This is one of the easiest ways to build wealth in a consistent manner since the Assets you built will earn for you.
- Think long term and invest in ventures that will profitable over a period of time rather than just thinking about a comfortable current life always
- Finance your children only till they gain qualifications and knowledge to stand on their own legs.
- Make your children learn how money works when it is borrowed or invested so they gain prudence in money matters early in life
- Safeguard what you save on them for your retired future
- When you implement such money habits at home, it will automatically inculcate financial discipline in the family spreading financial freedom equally across the same
Be a strategic borrower
- Ensure borrowing gets your last preference at all points of time.
- Avoid borrowing funds in the form of loans or through credit cards unless it is an emergency and you lack time to arrange for funds from a healthier source
- Even if you are forced to borrow funds, ensure you buy low cost funds. Being aware of high cost ones will help you have clarity to over borrowing when you do so during emergency situations
- Always borrow only when you are sure about your repaying capacities