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Become Rich Through Financial Management

We live in times where we can not be sure of the stability of the global economy. It is important to become disciplined by eliminating bad monetary habits and enriching our knowledge about financial management. It entails planning and making adjustments to one’s financial habits. In order to achieve continuous wealth accumulation, the habit of saving 10% of our income while spending only 60% on living expenses should be practiced. Most of us spend beyond our income or earnings which is the reason why we have no savings. This is a very common problem which is a result of the lack of proper financial planning and management.

This guide will teach you how to develop and improve habits that can lead to long term wealth accumulation.

Be in control: It is very important to know all the details about your finances. Track all your expenses and subtract the total from your income. The amount left can indicate whether you are overspending or spending less than what you earn. You can utilize one of the available online tools or applications which can help you monitor your finances.
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Save, save, save: Starting to save early on and setting aside money for savings as often as possible is a good way to develop financial discipline and awareness. Make it a habit to set aside a small portion of your income, say 10%, and set it aside for your savings is “paying yourself first”. Open an account specifically for your savings account which you should never touch.
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Emergency fund: Another thing that you should do is to put up an emergency fund which is basically the amount equivalent to three to six months of your expenses. You can start by setting aside a small portion of your income for this purpose. Remember that the emergency fund should never be used unless a crisis happens. To avoid touching the money set aside for your emergency fund, open an account which has no access to ATMs such as a passbook only account.

Don’t just save, invest: Saving will let you aside your money, but investing will let you accumulate wealth in the long term. There are many types of investments based on your risk appetite. There are treasury bonds, stocks, index funds and mutual funds. Choosing the type will depend of course on your risk appetite. If you are a novice when it comes to investments, it is best to consult with an expert like St George investment management.

Learning about financial planning and management as early as possible will benefit you especially in the future.