When it comes to managing our finances, few of us can claim complete mastery.
Despite our understanding of the importance of budgeting and saving with each paycheck, we often fall short of these goals.
Similarly, even though we recognize the value of having a well-thought-out financial plan, somehow, we never create it and when we do, most of the time we do not follow it.
All these bad habits often lead to a pattern of spending impulsively and failing to meet our financial goals.
Each choice and decision you make regarding your finances has a direct impact on your financial well-being and your ability to achieve your goals.
Therefore, it’s essential to understand the key attributes you need to cultivate in order to improve your finances.
In this article, we uncover what you need to know to have a fearless financial life.
1. Paying Bills On Time
Do you know that failing to settle your bills on time can lead to costly penalties? Besides this unnecessary expense that you could avoid, your credit score will likely be affected.
Remember, agencies responsible for giving credit scores, such as CTOS, closely monitor if you’re a good borrower.
To avoid downgrading your scores, make sure to pay your dues for electricity, internet, water, and phone on time.
Never assume it will be easy to dispute with the issuer whenever your bill arrives late.
There’s no assurance that your plea will be considered, even if you have genuine reasons. Therefore, be proactive and always settle your bills before deadlines.
2. Manage Greed And Envy
Envy and greed are common emotions, especially in professional investing as opposed to your personal finances.
The inability to control these two emotions can result in poor investment decisions that can lead to financial ruin.
For instance, in the world of poker, managing your bankroll is paramount.
Gamblers who succumb to envy or greed may not allocate their funds wisely and may risk becoming financially crippled by their impulsive decisions.
On the contrary, smart players who always practice disciplined bankroll management not only safeguard their financial stability but also enhance their prospects for long-term success.
Fortunately, if you don’t want to struggle with bankroll management when playing your favorite online poker games, you can check out this guide to bankroll management for online poker.
The experts at Tight Poker offers valuable information and strategies designed to help you maintain control of your poker funds, make informed decisions, and elevate your poker-playing experience.
Moreover, it goes further to show you bankroll management for online cash games, as well as for online multi-table tournaments such as sit & gos.
It also digs deep into the strategies that you can employ to safeguard your bankroll.
3. Create A Personal Budget
Most people who experience financial struggles often don’t budget their spending.
Without a structured budget, they find themselves spending money without purpose or control.
Having a budget is a necessary step for anyone interested in developing good money habits.
The budgeting culture will enable you to get more from your money through wise spending.
A budget will also ensure that you allocate sufficient money for everything you need and want and still plan for the future.
You can start the budgeting process by following these steps:
- Add Your Monthly Income – This comprises the salary earned from your workplace and any other source, such as tax refunds, business, and bonuses.
- Get a Total of Your Monthly Expenditure – This includes essential expenses like food, transportation, household bills, and liabilities such as student loans. For payments that cannot be quantified, like food, you can use an average amount depending on what you spent in the previous months.
- Subtract Your Expenditure From the Total Income – The amount you get after the subtraction will build your savings and settle debts. If what remains is insignificant for your financial plans, it is wise to cut costs by avoiding things like subscriptions and takeout foods.
It is helpful to look at your budget as a living document. This perception will enable you to adjust it accordingly whenever necessary.
For instance, you can scrape off an unnecessary monthly expense to settle loans or credit cards.
You can also use popular approaches such as the 50/30/20 rule to create your budget. This rule provides a clear guideline for allocating your income.
It suggests that you designate 50% of your income for essential needs like housing, utilities, and groceries, 30% for discretionary spending such as entertainment and dining out, and the remaining 20% for savings and debt repayment.
4. Taking Loans For Unnecessary Reasons
Many of us will opt to take loans whenever we need financial assistance. Some people take credit to pay for business, automobiles, education, and houses.
However, ensure there is a good reason for taking the loan. Due to unnecessary loans, many people are on the verge of a financial crisis.
So, think twice before seeking financing for that new furniture, vacation, or wedding.
Remember, for every loan, you will pay a monthly interest. This means you will pay more than the loaned amount.
Moreover, you will be tied to the loan until it is fully settled. Throughout that period, you might undergo intense financial pressure that might force you to take another loan.
Therefore, save money for things you intend to spend on rather than taking unnecessary loans.
5. Saving And Investing
Saving money is one of the wisest management skills every individual should practice. However, it doesn’t guarantee the financial freedom that many desire.
As long as your money is safely kept in the bank, it doesn’t grow. The interest the money accrued annually is insignificant compared to the period you save it.
Therefore, in order to live a fearless life financially, consider growing your money through wise investments.
However, every investment comes with a risk. There is a possibility of losing your money or getting returns.
Therefore, you must be wise before investing by conducting due diligence and calculating the risks.
You can also enroll in investment classes to know the best way to put your money to work.
A good investment will ensure your money grows over time. After a while, it will give you the much-needed financial security.
In order to have a fearless financial life, you need to learn how to manage your finances well.
Being aware of your emotions related to money, such as greed and envy, and dealing with them will open the pathway to a fearless financial life.
Other issues like not paying your bills on time, saving and not investing, and taking unnecessary loans will also put you in financial problems.
Therefore, addressing these shortcomings will ensure your financial life is void of fear.