By: Gynn Flores
It is not how much you earn but how much you keep that can secure your financial future. There are a lot of us who earn a lot but are still buried with debts like personal loans and payday advances making their take home pay very meager. Having many liabilities will make you incur interest expense which can make your take home pay much smaller. On the contrary, some people earn minimal amount only but are more financially stable as they are debt-free. Sometimes, rank and file employees are richer than managers in terms of liquidity.
Although it is not bad to avail of credit facilities for emergencies, they should not be used just to fund luxuries that are definitely not basic needs. We have to bear in mind that times are hard and incurring debts unnecessarily is not practical. We should prioritize securing our financial future than engaging in worldly things we can’t afford. There are several options on how to attain financial stability:
- Save at least 20% of your monthly income. Set this aside in a separate bank account that you are not supposed to touch. Treat it as if it is money already spent and therefore no longer yours to spend.
- Invest in the stock market. You can start small here contrary to what we perceive – that we should have a substantial amount before we can get started. This is meant to be a long-term investment – so do not expect to be able to pull out your money anytime. Putting your passive income for 20 years in this manner can even make you rich. In times of crisis, do not panic, in fact it is time to buy stocks from good companies while the prices are low.
- Pay off loans that have high interest rates. This automatically gives you savings from paying big interest. Credit cards when left unpaid on due date will make you incur late payment charges and penalties in addition to finance charges. Manage credits well to avoid incurring additional expenses. Most of your payments should cover the principal amount and not just the interest and penalties. If you can afford it, paying in advance can also build-up your good financial status.
- Buy a rent-to-own house- where the rentals you are paying now can be part of your monthly amortization. In some instances your rental expense is enough to pay the amortization. Instead of incurring an expense, it automatically becomes an investment.
When you have started on building up your wealth, you can’t help but experience a sense of hope and excitement. Gone are the insecurities and worries in your mind instead,you’ll feel like winning a battle in your life. It is therefore important that you take charge of your finances and don’t leave it to chance. Start now and change the entire direction of your financial future to make your dreams come true. Rather than touching your investments when the need arises, you can avail of personal loans but make sure that you prioritize on paying these on your next pay check.
Image Source: My Money Avenues