A healthy financial life is the most important thing everyone is looking for these days.
We are going through a hard period to cope with, when all that matters is to survive each day. We can hardly think about investments, prosperity and wealth.
We are thinking about how to survive with what we have or how to increase our comfort, but never about how to make our financial life simpler, so that we can live a financially healthy life.
Simplifying your life from a financial perspective is the first step you need to do in order to reach prosperity.
Hereafter, I will show you 30 advices to follow for a healthy financial life:
30 advices for a healthy financial life
- Set financial objectives for yourself. This is of the most important financial actions you should take.
Without financial objectives, we do not know what we are working for. We do not know where we are going and what we want to achieve. Financial objectives are what keeps us and pushes us to want more from life.
Set financial objectives for yourself on long term, 5-7-10 years, and then break them into smaller objectives, with concrete actions for each of them.
- Try fulfilling one objective at a time. After you have set the financial objectives, you can start fulfilling them.
Achieve each objective at a time. If you start multiple objectives at once, you will get confused. You will never know which one is important and which is not.
Once you have set the objectives within the first step, it means they are all important.
Achieve them individually in order to achieve the highest result.
- Use a personal budget. Personal budget is the financial mirror of your life. Without a personal budget, you cannot keep track of what you have achieved so far, what you did wrong and what you did good.
I recommend the article 10 reasons you should use a personal budget, where you will find the most important reasons for which you should use a personal budget.
If you do not have a personal budget yet, you can download for free the model you find HERE, which is the personal budget model I use.
- Combine your budget with your loved one. If you are married, now is the time to combine yourself with the loved one also from the financial perspective.
Achieve together the family personal budget and set financial objectives for yourselves.
Money is an important factor in a life of a family and if this factor is seriously treated, you will have nothing but benefits and you will have a steady relation with your half.
- Get rid of debts! The first objective you should have is to get rid of debts.
Debts are the main bump you should take care of.
I recommend these 2 articles in order to help you get rid of debts in the shortest amount of time possible: 41 techniques that can help you get out of debts.
- Always analyse your last month budget. This is a necessary and mandatory activity.
Each month, you have to analyse your budget and see what happened in the previous month.
Where you have spent your money, if you have complied with the budget or where did most of the money come from. These are very important activities which will help you achieve your objectives.
- Get rid of credit cards. If you have credit cards, this is the moment to get rid of them.
Why spending money you do not have? It is the worst financial decision someone can make.
There is the risk of failing to pay your debt, plus the debt grows a lot due to the associated fees and interests.
- Monitor your expenses daily. With the help of the personal budget, you can monitor your budget every day.
Do you know where your money is going? Which are the highest invoices? Do you need all your shopping you make? Can you abstain yourself from shopping certain products? Do you know where you can make some cost reductions?
These are questions you need to answer each time you analyse your expenses.
- Get rid of instalments and credits. Stop buying products in instalments. Try saving money to buy a product, instead of taking a credit for it.
Approach a savings strategy instead of an instalments strategy. It is better to save each month 100 lei and buy the product you want when you have the money, than paying for it in instalments, paying fees, interests and getting the bankers rich.
- Constantly analyse your telephone, internet cable TV subscriptions.
Are you watching TV daily? Do you need that number of minutes or messages? Are you using to the maximum your broadband internet connections?
Are there other packages that are more to your advantage?
I am sure that the answer to the last question is YES. Each time we can find better packages, we only have to look for them.
- Set up an emergency fund. This is the second measure you have to implement once you got rid o f the current debts.
You never know when an unforeseen situation can occur and you need money.
All I can say is that THERE WILL ALWAYS BE UNFORESEEN SITUATIONS. There is no “unforeseen situations cannot happen to me”.
Why not? Nothing has broken inside your house which needs repairs? Your car did not break? You never got sick?
For all these, there is the emergency fund.
Be careful! Go to the emergency fund only if you had no possibility to foresee the expenses in the budget. These are those moments you cannot be aware of beforehand.
Do not go to the emergency fund if there is a TV sale. Doing that is WRONG.
- Have at least 2 passive income sources.
Passive income is the income which you do not have to give time for in order to achieve it. It is obvious that you have to give it some time at first in order to achieve it, but, along the way, that time should bring you money.
If you reach a situation that the passive income supports you each month, it means you are on the right track towards a healthy financial life.
- See what you did well and try doing it again. Do you have a personal budget that works properly and that you follow constantly? See what worked. See what actions you took that increased your income and take them again.
Make a lifestyle out of it and your income sources will never stop growing.
- Reduce your expenses as much as possible. Never stop reducing your expenses in al possible environments.
A useful article which will help you reduce costs for electricity, natural gas, water and fuel for your house and car.
- Rent. Do you need a car only for a certain period of the year? Do you need a new house? Do you want to marry the bank for 30 years?
Then the answer is the verb “Rent”. It is not the right moment to buy houses, nor to bind ourselves an entire lifetime for a credit which, in 10 years, will not worth as much has it is worth now.
Try living with rent and investing. Make your money produce more money. After they make enough money so that your 2 years income covers the cost of a house, you are ready to have your own house.
Until then, think about how to make as much money as possible.
- Make a list of all your assets. This list will help you figure out what is the net value of your wealth.
Yu will see immediately what you have spent your money on and how many assets you really needed and which you did not.
- Get rid of things you do not need. Once you made the list and analysed the things you own, try to get rid of those you do not really need.
Usually, 30% of the list should be eliminated in this step. If you think you have assets your really do not need, try selling them.
After this, you will definitely adopt the policy “I buy a product only if I really need it, not if I only like to have it”.
- Use cash payment. If you go shopping, leave your cards at home. Go with cash on you. Each transaction made with the card needs a fee. Each fee is an expense for which you were too comfortable to bring cash.
Ideas like “If I have cash, I may feel like spending them” or “I do not take cash on me because I might get robbed” should go away. Banks are a bigger thief and, what do you know?, they are totally legal.
- Get rid of all kinds of subscriptions to magazines, newspapers or other publications. All information you find in them, you can also find on the internet for free. Subscribe to online publications and read the news daily on the internet.
- Learn to negotiate. Yes! You heard me. We all need to know how to negotiate. At the market, at the store or AT BANK.
Bank is a good place where you can negotiate. If you know how a bank works, you can end up a millionaire, as Robert Kiyosaki did.
He used the bank in his favour. He negotiated credits for certain real estate investments, so that they would make money for him.
He did not use the bank to buy his own house, but to buy houses which he rented or sold for larger amounts of money.
- Learn to simplify your financial life. Try to do everything you did so far with less resource. Eat less, drive more economically, buy the same things for less money or consume less electricity as you did so far.
Analyse your habits and simplify them!
- Read more on how to correctly manage your own finances. Education is the most important. Unfortunately, the Romanian education system does not reach the financial environment and, due to this fact, more and more people have money problems.
All that is left in this respect is self-education. I recommend reading books, follow financial education blogs and always be informed on what is happening with the economy of the country.
Country economy is an important factor which affects our financial lives both directly, as well as indirectly.
- Use the car only when you need it. Stop going by car to work, except if the car belongs to the company. Mass transportation is cheaper and more advantageous.
- Only one family car. Now the trend is that a family should have at least 2 cars. Why? Get rid of one. Use mass transportation as much as possible. I am convinced that your job is not as far as it looks.
Calculate the fuel consumption for the two cars for a month and this will definitely make you eliminate a car and think about using mass transportation more.
- Buy a car with smaller fuel consumption. Why do you need a car which consumes 12-13 l of fuel per 100 km? Buy a car with smaller consumption.
You are saving money that you can use for other purposes, plus, a smaller car is easier to handle.
- Buy second hand goods. There are so many electronic and electric household appliances sold second hand.
If you need a car, a fridge or a washing machine, why buy them new?
Unfortunately, any fixed asset (car, computer, fridge) loses 30% of its value the moment you buy it.
Why lose 3000 euro for a 10,000 euro car in just one day?
Better buy more second hand cars for a much smaller cost.
- Stop thinking small. Try to think from the perspective of a month for each purchase. When you make a subscription, try analysing it for a whole year.
Take a mobile phone subscription for example. If we have a 30 euro subscription and, for this subscription, the telephone company offers us a last generation Smartphone for a small price, we think we made a good purchase.
This is not true. If we calculate the 30 euro monthly for 2 years we end up with a price of approximately 700 euro. We are not consuming all minutes and the phone is not worth the amount we pay for the subscription.
All offers are made so that the seller has the advantage, but if we make a small calculation we can see that the advantage is on our side if we buy a phone with a subscription of 7-8 euro.
Think of such analysis each time you want to make a subscription, then make a decision.
- Make an investment plan. There are so many places where you can invest our money. Many people who have no investment plans think that the money they make are too little for potential investments.
Wrong. Save money. “Tighten the strap” in certain financial areas in your life and direct your money to an investment plan.
Investments are the best because they will bring money in the future. For you, they can be a passive income.
- Learn yourself to invest. Investing is quite hard. You must have patience, knowledge and read a lot.
It sounds difficult and sounds too much for you. Why? Who do you think will invest your money better than yourself?
In investments, everyone goes by the saying “No one will take care of your money better than yourself”. The best investments are made when you invest your own money.
If you have too much money, you can use a financial adviser to keep your investments portfolio, but the final decision is yours.
I advise you to start now reading more about investments. A first step you can make is to subscribe to this blog, after that you can start looking for all kinds of ideas and places to invest your money.
This can be a game for you. Investing is like playing a game. You only have to be focused and the decision you make at the beginning have to be made on as many and as concrete information as possible.
- Always analyse each advice. I gave you the advices above, but not all of them are working for everyone. For some, only the first ones work, for others only the last ones.
Try to analyse each advice from your life perspective. See how they can be applied in your life.
Give yourself each week or each month the necessary time to analyse your financial life and make decisions for this purpose.
Take your time when it comes to money, because nowadays money is one of the most important factors for our future.
What other advices would you add to this list?
What is your favourite advice and which one do you think is the best advice of this list?