We are living in a fast-paced world where technology is too advanced. To keep pace with this ever-changing world, you need your pocket full of cash. All right, your pocket is full and you are living your life to the fullest. But have you ever thought of the outcome? If no, then please think about it because it is about your future.
A strong financial base is the root of a happy life. Moreover, living a disciplined financial life means preventing yourself from falling into any unexpected debt. Not only this, but it also builds solid financial health that is immune to a lot of hurdles.
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Set limit on expenses to control overspending
If you have too much spending habit, think about it because it’s a great obstacle on your way to living a sound financial life.
It is very hard to earn money but easy to spend just like the saying “money comes like a turtle and goes like a rabbit”.
It’s very hard to earn money but easy to spend just like the saying “money comes like a turtle and goes like a rabbit”. Click To Tweet
You can follow some simple tricks to avoid being a spendthrift:
Differentiate between your basic needs and desires. Confused?! It’s quite normal for a spendthrift. All right, let me clarify it for you. Basic needs like the Maslow’s law say implies a decent living place, healthy food, drink, and enough cloth to wear whereas a luxurious palace, expensive food and drink, and high-level brand clothes are your desires.
Adopt smart shopping. Smart shopping means buying those things which you really need. Bargaining also falls into the smart shopping category. Moreover, buying quality items rather than the cheapest ones is another kind of smart shopping.
Limit outing and partying.Instead, spend some quality time with your friends and family.
Plan a tight budget to keep yourself within a boundary
If you want to attain ideal financial health, it is necessary to create a budget that will help you to be frugal enough. You will have to follow some basic steps to create a budget:
- Assess your income.Calculate everything like regular salary, extra funds (selling items), and other income sources (such as interest, alimony, rental income, and so on). Now add them to know your accurate income.
- Figure out your expenses.The expenses can include paying domestic bills like electricity, gas or water bills, credit card bills, insurance payments, and so on.
- Nowsubtract your expenses from your income. If you find that you are making more money than you spend, then it’s great as it will help you save or pay off debt. But if your expenses are more than your income, it is time to cut back some expenses to avoid debt.
- Apart from these, you canfollow the 50/30/20 budgeting plan. Put aside 50% of your income to meet your needs, 30% for wants, and 20% that is left for savings and paying off debt.
Give priority to building an emergency fund
An emergency fund can help you a lot on your way to a sound financial life by keeping debt at bay. Moreover, it can help you cover those things you’ve not budgeted for like medical costs or home renovation or car repairs.
So, you can make use of your emergency fund to handle such difficult situations and stay away from debt.
You can open a separate saving account in an online bank for the emergency fund.
Be quite realistic while setting goals
To get a decent financial life, saving is a must. In order to save a decent amount of money, setting a goal is a must. Only a realistic goal can help you balance between earning and spending, and saving more. You can set two types of goals:
Short term goals
These goals are the ones that you’d like to achieve within 1-2 years. These goals can include minor home improvements, buying household furniture, or saving for a car.
Long term goals
You will have to spare more than 4 years to achieve the long term goals. They generally comprise of savings for a home down payment, a major home renovation project, or your child’s education or retirement.
You just make sure that you’re setting a realistic goal.
Grow a saving mindset to get a strong financial life
A habit of saving helps you live a well-disciplined financial life. So, start to practice saving to improve your financial health. How will you start? Here’s the way:
Set goals (long term or short term) just to stay on a track of saving.
Pick the right tools. For short term goals, you can consider using a savings account or certificate of deposit, and for long term goals, you can go for stocks or mutual funds.
Go for an automatic savings planwhere you don’t have to put any effort after set up. Moreover, it will help you control your spending habit and handle multiple saving goals at a time.
Pay off credit card bills on time to avoid unnecessary debts
Many people don’t give much importance to paying off their credit card bills on time and this is really a bad habit. If you belong to this category, you need to change course now as it will ruin your credit and keep you in debt longer. There are no side effects to grip a good habit. So, set your mind to repay your debt on time.
Just follow the below tips to make your payments on time:
- Make a rundown of all bills
- Check when your payments are due
- Create a calendar and add payments to it
- Decide how much you can pay
- Opt for an automated payment system
- Plan for manual payment systems
- Set up reminders in your phone or on your calendar
Check your credit report regularly
This year you are aiming for a perfect financial health. So, you are doing everything right from cutting expenses to paying all bills on time. But tell me how often you check your credit reports? If you cannot answer that question in 2 seconds, then I will highly recommend you check your credit report regularly as:
- It will help you manage your personal finances like tracking your spending and saving.
- It will prevent you from being a victim of identity theft.
- You will have the chance to correct wrong information if any.
- It will help you rebuild and maintain a good credit which is the main base of a good financial health.
Go for a side hustle to earn extra money
If it becomes too difficult for you to cut some expenses, you can consider having a side hustle to earn some extra money. You can go for a side business if you are skilled enough in managing both your main job and business. This is particularly difficult for physicians, but there are many who get it done including me.
Do you have any skill? You can also consider any type of freelancing to earn some extra bucks and save more. Considering a side hustle can help you save more and pay off debt faster.
Take care of your health to cut out the extra medical cost
We all know “Health Is Wealth” and you should follow this saying to attain a sound financial life. Staying healthy and fit is the most important part of being wealthy as it reduces medical cost at a considerable rate.
On the other end, a weak body slows us down from achieving something and distracts us from our aim. So, follow tricks to stay fit:
- Eat your meal on time and also consume healthy food and drink.
- Try to follow the “early to bed and early to rise” mantra. I discuss the many tips to have a good sleep here.
- Exercise regularly.
- Visit your doctor for a regular checkup.
- Think positive and stay positive.
Gather proper knowledge about different debt relief options
Falling in debt is like encountering an accident. Anybody can fall into this trap knowingly or unknowingly. That’s why it will be best for you to get acquainted with theways to reduce your debt.There are lots of debt relief options like:
- Debt settlement program
In this program, a debt settlement company negotiates with your creditors to reduce your outstanding balance and repay debts through a lump sum amount on each account. Thus you’llget out of debt fast.
- Debt consolidation program
Here, the consolidation company assesses your financial condition and then decides upon a convincing amount, which you will have to pay to the company every month. The consolidation company will disburse the amount amongst your creditors.
- Balance transfer
It’s a method where you’re transferring higher interest bills to a new card at a lower interest rate. You just have to repay the dues within the low introductory period to avoid the increased rate of interest. This is also called credit card tarting.
Final thoughts
Money is not everything but money is very essential in life. Without money, you are just helpless to manage your life. So, just follow the above-mentioned tips to build a strong financial base and lead a peaceful life.
Wish you a debt free, stress-free, and a strong financial life!!!
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Can you think of other ways to improve financial health? Let us know in the comment.
Adebayo
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I am a pulmonary and critical care doctor by day and personal finance blogger/debt slaying ninja by night.
After paying off close to $300,000 in student loan debt in less than 6 months into my real job, I started on a mission to help others achieve the same. There is no magic to this than to strap up and get it done. Some of the ways we achieved this include side hustle, budgeting, great negotiation skills, and geographical arbitrage.
When I was growing up, common knowledge in Nigeria is that there is one thing you cannot trust anyone else with, and you guessed it – your money.
Being frugal came easily to me based on my background. However, the concept of building wealth did not solidify in my mind until when I finished medical school. I wish I knew what I know now when I was 14. Still, I don’t know enough and I am constantly learning to improve my knowledge.
My goal is to reduce financial illiteracy among young professionals. I am catering to the beginners – babies and toddlers in financial literacy.
