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Good Financial Habits
Has your personal and/or household debt spiraled out of control? If you find yourself unable to make ends meet at the end of the month or you are constantly stressed about money, then it may be time to take a closer look at what you might be doing wrong. Bad habits can hurt your finances, so it is important to learn to break harmful financial habits.
Accumulated credit is often mistaken for wealth. Revolving credit card debt still accounts for a majority of personal and household liability in America. Credit card borrowing is still on the rise, despite how damaging it can be for those who don’t distinguish between credit and wealth. A credit line is an available amount of money you can borrow. Your wealth, on the other hand, is a measure of the value of the assets you own. Wealth can take the form of money, property and personal items.
Mistaking credit for wealth is a bad financial habit that can lead to serious trouble. Credit lines can give you a false sense of security or an impression that you have more money than you actually do. This leads to overspending and the accumulation of credit card debt. Instead of charging items and services, try waiting when you can and saving up the money to pay for things instead of relying on credit cards.
To help control credit card debt, it may be necessary to be frugal at times. There is no time like the present to start practicing frugal spending. This is true regardless of whether or not you’re currently in a boom or a bust phase of life. Embracing a more sustainable lifestyle is a major part of practicing smart spending. As long as you’re living and spending beyond your means, you’ll never experience true financial stability. Spending carefully doesn’t mean you have to give up the majority of the items and services you currently pay for, but it does mean reassessing what’s most important and deciding what can be left out of the monthly budget.
An important practice is to buy items meant to last. Give up items and services that aren’t essential to your health and happiness. Eat at home more often or try your hand at a home vegetable garden. Take public transportation or carpool to work when you can. Don’t always think you have to have new technology right when it hits the market. There are hundreds of ways to start living more frugally that you can start today. Do your research and start incorporating them into your daily life now.
As with anything in life, if you don’t have a solid financial plan, then there’s no telling where you’ll end up. Building financial security takes careful planning. Motivate yourself to save more money by setting goals. You may start saving for a major purchase or to pay for your education or a trip. You can also set a financial goal as to how much cash you’d like to have in your checking or savings account by the end of a set time period.
Keep track of your financial goals and hold yourself accountable. You can plan out a monthly budget and then make saving for a financial goal part of that budget. Once you’ve worked out a reasonable monthly budget, make sure you stick to it. This is an excellent way to change your bad financial habits to good ones.
Saving for retirement is a very necessary and important financial behavior. If you think you’re too young or just too broke to save for retirement then you’re most likely guilty of this bad financial habit. When you’re in your twenties and thirties it’s easy to convince yourself to put off saving. But the earlier you start, the more interest your money can earn over time. Giving your earnings time to compound means you won’t have to put away as much to have a comfortable nest egg in the future.
Start saving for retirement as soon as possible and don’t make excuses. Try to put away between ten and fifteen percent of your income at least — more if you possibly can. If you’re already in your forties and have yet to begin saving for retirement, then you’ll want to work out a plan to put away more. Take advantage of any work retirement plans such as 401k plans to help you save more. Opening up an individual retirement plan or an IRA is another excellent way of saving for your retirement. There are several retirement options available. Make sure you research and investigate the savings plan that best fits your needs.
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