This post is all about how to reach and maintain financial success.
If anyone tells you that money isn’t important, they are probably lying to you. You can’t do anything if you don’t have money. As terrible as it sounds, it’s true.
Do you want to eat yummy food? You need money. Do you want to hang out with your friends? You need money. Think you could save money by staying home and hanging out? You need money to pay for home activities too.
There is nothing free in life anymore. As much fun it is to spend the money that you get or earn, you need to know how to manage it too so that you’ll never have to give up your fun.
Since I have been exposed to the world of money and its importance, I want to relay all the knowledge I learned to you.
This post is all about how to reach and maintain financial success.
Disclaimer
This post is for informational purposes only. I am not a professional or expert when it comes to saving money and becoming financially successful. I speak from experiences only and everything mentioned is my personal opinion alone. You, the reader, will read at your own risk and should not make any important decisions based on my recommendations. Do more of your research first. I will not be liable or responsible for any consequences that arise should you decide to take my advice. There is a chance that some information may not be correct but please know that it was not intentional. Hence, why I say to not take this seriously and to do more research.
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Let’s begin.
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How to Reach and Maintain Financial Success
1. Spend Less Than Your Income
Spending less than your income is very important when you are trying to teach financial success.
If you think about it, you know you can’t spend more money than you have, right? Or else you’d be in debt.
Therefore, the best way, and the only way, you can increase your savings to reach and maintain financial success is to spend less than your income. The less you spend, the more you’ll have to save.
If you want to spend less than your income, the first step is to be aware of where your money is going.
This list should include your necessary payments such as rent, food, and other bills, your wants such as shopping, eating out, and fun, and your savings if you’ve been saving money on the side already.
Now that you know where all your money is going, you can start identifying which purchases are worth keeping and others that are draining your bank account unnecessarily.
After you know and have determined where your money has gone and is going, you should create a budget for yourself.
How much can you afford for [blank] to avoid going broke?
You could follow the 50/30/20 rule where it’s 50% on needs, 30% on wants, and 20% on saving and/or paying off debt. Or you can follow other budgeting methods. You can follow whatever budgeting method works for you.
But the benefit of budgeting is so that you make it much easier for yourself to spend less than your income. You know where your money is and where it is going and you’ve figured out how to use it wisely and intentionally.
2. Have An Emergency Fund
After you’ve learned how to spend less than your income, you may or may not have extra money depending on the kind of budget you set for yourself. But what do you do with this extra money?
I’m assuming you didn’t follow the 50/30/20 rule and only set budgets for needs and wants. Whatever was leftover would be extra money to do what you want with it.
If you’re thinking about using that extra money to contribute more to your wants, think again. I suggest that you use your extra money to create a savings account for an emergency fund. Having an emergency fund is important because it ensures that you will be able to handle any large, unexpected, and expensive financial situation.
For example, if you lost your job one day whether it’s being laid off, fired, or quitting, you need to have money saved up on the side to ensure you can survive the time you’re out of a job. It is recommended to have at least 3 months’ worth of money for your living needs so that you can spend that time finding a new job or getting back on track without stressing about being financially unstable.
I believe that 6 months or more in savings is your best bet. But of course, if 6 months is a little too much for you then make sure you have 3 months of living money as the minimum.
To build up your emergency fund, set aside a couple of dollars a week, and eventually, it will add up to 3 months worth of savings. The sooner you start, the sooner you’ll be financially secure.
You never know what could happen in your life and you most definitely don’t want to face hardship without any money to support you.
3. Treat Credit Cards Like Debit Cards
This tip may be confusing for some but I recommend treating credit cards as debit cards.
Many people will tell you how bad credit cards are and how much debt and trouble they will get you in, but here’s the thing. If you know how to use your credit card correctly, it will be your best friend and will make your life easier and more fun.
The way that people get into trouble and get into debt is by not paying off their credit cards in full and on time, and they swipe it for items that are worth more than they can afford in their bank accounts.
The mindset you need is if you were to pay for this item in cash only right now, would you be able to? Do you have the cash in your pocket? Do you have the cash in your bank account? Are you financially stable enough to make this purchase right now and not go into debt?
If you answered yes to all three, then you can make that purchase. It is crucial that you pay off your credit card in full and on time.
Overall, if you do it correctly, I want you to use your credit card for as much as you possibly can in place of your debit card.
- It’s safer because your credit card isn’t taking money directly from your bank account as soon as you make a purchase.
- Depending on the kind of credit card you have, you could get rewards to receive free or discounted benefits in the future. Do lots of research on this.
There are lots of credit cards out there with different rewards. Do your research to get a card that best matches your lifestyle.
4. Spend Frugally + Intentionally
To reach financial success, you need to be spending frugally and intentionally.
This means no impulse buying. No spending under peer pressure. You need to have a thorough evaluation of what you decide to spend your money on. The steps that I follow to spending frugally and intentionally are:
- How much is it?
- Is this useful?
- Do I need this?
- Does it fit in with my lifestyle?
- Is there something more important for me to spend this money on?
Of course, there were times where I bought things anyway even if I answered no to some of these questions; however, I still did extra thinking and evaluation before I took the plunge and made the purchase.
The advice that I have received is to focus on the larger picture and to shop on sales or clearance only. The only time you should be purchasing a full-priced item is if you need that thing right now or the same day.
Every single purchase you make, you need to be thinking long-term. Is what you’re about to buy worth your money? You have a goal for your future financial self. Does this purchase align with your goals?
Think about it, always.
5. Invest Your Money
If you have even more money leftover on top of your savings and emergency funds, you should invest it. Invest your money into retirement accounts. Invest your money in brokerage accounts.
Why hold your money when you can let time grow your money for you?
The secret is compound interest. I won’t be great at explaining compound interest to you either so do your research on that too.
If you decide to invest in 401k or the stock market or whatever you want to invest in, remember that investing is a big responsibility. Your money could grow but your money could also disappear. If you play the stock market correctly, you should be going up a majority of the time.
If you want to think about super long term financial success such as retirement, investing you money is your best option. Hire a professional if you need to.
If you’re not interested in the stock market, consider investing in yourself. Investing in yourself means to develop some skills you may be lacking such as public speaking, job experience or a degree.
The more skills you have, the easier it will be for you to gain job opportunities and high pay opportunities. Make yourself an asset. Make it to where everyone wants to have you and no one wants to let you go.
Live on your own terms with what you want in life.
Ending Note
That’s all I have for how to reach and maintain financial success. There is a lot to getting yourself where you want to be but it is so important that you take money seriously from the very beginning. So, just for a recap:
- Spend Less Than Your Income
- Have An Emergency Fund
- Treat Credit Cards Like Debit Cards
- Spend Frugally + Intentionally
- Invest Your Money
I wish you luck on your financial endeavors. Have a good day!
Delicate and brutal says
Great post! Congratulations on realizing the importance of financial responsibility at such a young age! It took me until my late 30s to learn and apply many of these lessons.
Lily-Anne says
Thank you! I had lots of help from relatives over the years for sure.