Every waking hour, you are making important decisions. You choose what to wear, what to eat for breakfast, which route to go to work, what to eat in the evening, which workout to do, what to watch on television, and so on. By making these daily decisions, we start to form habits, some of which are good and some of which are bad. These habits affect every element of your health and well-being, including your financial health. This is why financial experts like Keith Springer advice people on some financial habits to develop. Let’s take a look at those habits.
1. Be Aware of Your Earnings and Your Spending
You have to start by knowing exactly how much you earn. Fixed salaries make this very easy, but if you earn commissions, it can be slightly more complex. The more of your income depends on commissions, the harder it is to work out what your earnings are. In this case, the best way to work it out is to take the average over a two to three year period.
2. Don’t Spend More than You Earn
This seems logical, but a lot of people live well above their means. If you want to be financially healthy, you have to make sure that your outgoings are lower than your income. The less you spend, the more you save, the more you earn on your savings. It can be very difficult to spend less than what you earn, however, because most of us simply don’t really know how much we spend. Hence, for a three month period, you should write down everything you spend, down to the last penny, so that you can see where you can make some savings. Once you know this, you can decide which “rule of saving” you can used. Some believe you should save 10% of all your income. Other say that you spend 50% to your essential bills, 30% to your personal things, and 20% as a saving. Some people will go so far as saving as much as 80% of their earnings. What matters is that you set yourself a goal.
3. Have Insurance
It is absolutely vital that you have insurance. Home, care, life, medical, and dental insurance are essential. Did you know that 62% of people filing for personal bankruptcy do so because of medical bills? And that 78% of these did have some health insurance? What this demonstrates is that, firstly, you need insurance and, secondly, the insurance is personalized to your needs.
4. Be Ready
Unexpected things can happen, and you have to make sure that you are ready for that. You might lose your job, you might become ill, you might have to take time out to look after someone else, there might be an earthquake, and so on. Be ready for those by having at least two months of income available to you, giving you the time to find something else.
5. Have a Plan in Place
Work with a financial advisor like Keith Springer to develop a proper financial plan. This ensures you know where you stand and what you should do, and how you could maximize the savings that you do have.
A final tip would be to simply earn more. This is the most effective method, but also the hardest to achieve.