The secret to financial success

 

Financial success means being in control of your money. Your income doesn’t determine how financially successful you are, your choices and priorities do. By understanding what you want to achieve financially, establishing a realistic budget and savings plan, and preparing for your future, you can establish personal financial control. These 5 tips will help you make educated choices based on clear priorities. Changing life-long financial habits may take some work, but by following these tips, you can make the adjustments you need to make your money work for you.

  1. Set financial goals: Financial goals give life and direction to your dreams. Having financial goals can help you save more and spend less. Identify your goals based on your standard of living and family( saving for a vacation, a home, or for kids’ education), then set intermediate deadlines and break bigger goals into smaller ones to achieve them easily.

  2. Create a budget and stick to it: An important step to consider when trying to achieve financial success is budgeting. Follow the popular 50/30/20 budgeting rule. It says that 50% of your salary should go towards needs, 30% should go towards wants and 20% should be saved.

Here is a guideline to allot the appropriate amount to different categories.

  • 35% - housing (rent, utilities & insurance)

  • 15%- food (at home and dining out)

  • 12%- transportation (uber, public transport, parking)

  • 10%- Entertainment (cell phone, cable bill, and internet)

  • 7%- retirement savings (excluding employer match)

  • 8% - Debt (student loan and credit card)

  • 5%-Health care (insurance and medicines)

  • 3%- clothing

  • 5%- Other savings(emergency fund and goals)

  1. Have a savings plan: You've heard it before: Pay yourself first. If you wait until you've met all of your other financial obligations before seeing what's leftover for saving, chances are, you'll never have a healthy savings account or investments. Set aside a minimum of 5% of your salary for savings before you start paying your bills. Automate savings in high yield savings account to earn interest and grow your savings.

  2. Insure big risks: Examine the risks in your life like job loss, life insurance for earning members, medical urgency and insure them appropriately. Compare insurance options and be sure to check out your insurance options at least once a year. Choose a plan that secures against a wide range of medical problems and provides a wide network of hospitals across the world. Experts recommend a 15- or 20-year term life insurance policy that covers 10–12 times the amount of your annual gross income.

  3. Focus on the future, not the past: Too many people invest by looking at last year’s results and putting their money in things that did well last year. That is not the best way to pick investments. Instead, focus on where you want to be in the future, and consider what long-term strategy is most likely to get you there. Investing money across multiple asset classes, like emerging markets, and real estate funds is much better.

Financial success is not determined by the amount of money you make but how comfortable and in control of your financial situation, you are. Follow these 5 steps and you’ll be well on your way to achieving financial success!

Achieving financial success takes time and hard work, follow for more such tips and articles that will help you to achieve financial success faster.


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