Becoming rich is hard but here are a few things that help even though they may be stating the obvious. Or are over looked and practically shunned by most people.
1. Staying on Budget
Creating wealth for yourself means that you have to start sticking to a budget. You may think this is absolutely unnecessary, impossible or a pain but the best thing you can do is to stay on budget. The BEST budget is the one you can stick to-if you ignore it, there’s no point in having it.
Basic living expenses, like rent and food, should be your top priority, followed by transport and saving for a near term goal. Like paying for a course, up-grading your wardrobe or starting an emergency fund.
List all your monthly expenses and subtract them from your monthly income. If you’re spending more than you earn, you might have to cut back on some purchases and activities. If you have a little money left over, keep it and use it for one of your goals.
Sometimes you may have to make difficult calls but be diligent and stick to your budget!
2. Not Borrowing More Than You Can Cope With
Borrowing more money than you can afford to pay back easily is one of the worst things you can do. ADD on the interest rates that can be very high and your balance will rise quickly.
It’s fine to use borrowed money for purchases or activities that will earn you money or further your education. If it is for a business; make sure that your business venture will earn more than the loan. If it is for education and you cannot get an employee loan and have to take out a private loan, shop around.
When you borrow money do not focus just on the initial cost but also on opportunities for deferment or available payment plans. It’s worth paying a little more for more flexible repayment terms. BUT, at the end of the day don’t borrow more than you know you can manage to pay back!
3. Putting Aside Some Money
When you do not make putting aside some money a priority you will run into trouble at every emergency that comes your way. Spending all your money, sometimes quickly and haphazardly will mean you will never have any left over to use for an emergency.
Not having money you keep on hand to cover unplanned expenses like medical emergencies or to travel to an unplanned location and for living expenses when there is an unexpected loss of income is not a smart way to live. You will end up borrowing money with high interest charges and you will fall behind on some of your other bills.
Start an emergency fund today if you don’t already have one. Decide how much you want to be in that fund permanently for most of the year and start saving toward that amount. Keep saving until you meet your goal.
Always replenish your emergency fund after you take money from it and re-evaluate your fund every quarter or as your goals, income or family size changes!