A friend of mine once told me that “money is a spirit, it could be here today and out tomorrow”. A lot of people feel this way about money and others even feel worse about money.
Sometimes, earning a huge amount of money isn’t the key to having a healthy financial life — it’s the way you live and the money practices you follow that determine how healthy your account would be.
There are certain money principles that everyone should adhere; they would make a huge difference.
1. SPEND LESS THAN YOU EARN
This is a simple and basic money principle that’s highly essential, but it’s one that a lot of people can’t come to terms with.
Following this simple principle would leave you debt free and also in good control of your financial life. This simple tips make the rich richer and makes even the ordinary man pay his bills without a blink.
This is another simple but highly important principle; however, it’s one that a lot of people underestimate its importance.
Budgeting provides a pathway to the first tip mentioned of spending less than your earnings. With budgeting, you also have control of your day-to-day finances, prioritise expenses, plan better for your basic needs and even unexpected needs and also act as a check to spending unnecessarily. Never underestimate the power of budgeting.
3. KEEPING RECORDS
This is another money principle that’s highly important, but the lazy man sees this as stressful and unnecessary. Keeping records of your financial transactions gives you better knowledge of your financial life, and that in itself is a financial victory.
Keeping records of your financial transactions would enable you know how effective or ineffective your budgeting is and how to correct the loopholes. It would also give you a clue on what’s actually consuming a gulp of your money and how to minimise it. Basically, you understand your financial position better when you keep records, and it’s even dire that some business people don’t see the need for record keeping.
Understanding the value of money might not specifically be a common financial advice, but it’s probably an important advice that would set the path for every sound decision you make; it’s probably the foundation that determines your financial position.
When you have a good value of money and understand why it’s seen as a scarce resource then you would apply better usage of it.
5. INVEST AS EARLY AS YOU CAN
A lot of people shy away from investments, but investments basically are what separates the billionaires and millionaires from the ordinary man. To the common man, saving for retirement is the best financial decision ever, while the businessman sees investments as the best retirement policy — they let their money work for them for as long as possible. The basic difference between savings and investment is that the money remains static in savings while the money in investments goes to work with the aim of yielding returns.
Never be shy of investments, and try to invest as early as you can — you don’t have to wait till you’re nearing retirement — procrastination and investments never go hand in hand.
Savings have always been an important aspect of finance and it’s one that would forever remain important. Savings can be the catalyst for investment and can also be what provides a relief for your future self. See savings as fun and important and make it a habit.
With these six money principles, you would be sure to have a better guide to making better financial decisions and living a healthier financial life.