How to Build a Healthy Financial Lifestyle

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Monday, June 29, 2020 / 06:40 PM / Chinyere Onyia Header Image Credit: Raw Pixel




When we think of our future, we all dream and plan for a financially stability for ourselves and successors. Building a financially healthy lifestyle has to do with eliminating debt, budgeting, insurance and investing for retirement.

 

Dealing with all these concepts and aspects is not an easy task, however, reading books both online and offline on personal finance and learning from a personal finance expert will come in handy and open  opportunities for securing our finances.

 

 

In building a healthy Financial Lifestyle, the first thing to do would be to:



 1. Read Books / Publications on Personal Finance


How determined are we to reach our goals this year? If you have been toying with the idea of finally getting out of debt, making more money, saving or learning to invest then the key to reaching those goals is educating yourself and implementing best practices. I implore you to make the remaining part of this year 2020 the time to get serious about achieving financial and investment goals.

 

There are books that can transform how you manage your personal finances (if you apply the tips). This list of personal finance books are the BEST finance books that I have ever read. Not only that, they are constantly rated as the best money books among personal finance experts. They are: #PFSeries1 - Wedding-Marriage: Between an Event and A Journey#PFSeries2 - Raising a Baby: The Pleasures, Pressures and Financing The Richest Man in Babylon by George S Clason, Smart Money Woman & Smart Money Tribe by Arese Ugwu, The Total Money Make Over by Dave Ramsey and Think and Grow Rich by Napoleon Hill. 



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2. Pay Off Your Debt


Paying back a loan takes dedication, planning and financial sacrifice, but it is worth it because living a debt-free life opens up the opportunity to start building your wealth. 

 

Whether you have a big debt or small debt, it is imperative to keep up with the repayments to ensure that the amount owed does not get out of control. Getting your debt sorted is even more important during the current crisis. The coronavirus pandemic has to an extent, damaged the economy and caused financial challenges for nearly every Nigerian.

 

To manage your debt better during this period - know how much you owe:  calculating your total debt can be overwhelming, but this is something you have to face directly, if you are serious about managing your repayments. It is also crucial to pay back early as paying a creditor late can also result in "late payment fees", which is just more money gridlock.

 

If your payment is late more than once, it can negatively affect your credit rating and the interest rate charged on that particular debt. You would also need to choose a payment strategy that works for you and if possible, automate your account in such a way that there will be an instant debit once it is time to repay your loan. 



 

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3. Start Budgeting


If you are struggling to handle your finances, then you likely need to create a budget. A budget is your best tool to change your financial future.

 

To start, write down your income and all your expenses, and then subtract the expenses from the income to determine your flexible spending.

 

At the start of each month, set up a budget to allocate how flexible funds get spent. Track the spending over the course of the month, and at the end of the month, determine whether you stayed with your budget.

 

If you spent more than you made, fix your budget by cutting unnecessary expenses or earning more and then implement the revised budget the next month to start living within your means.




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4. Avoid Overspending and Learn from Your Mistakes


The journey to financial independence wouldn't always be easy. There will be some tough days, weeks and even months and pursuing a goal of financial independence that's very much tied to delayed gratification is not always fun, but it is completely doable.

 

Have a solid plan for your finances, be disciplined and avoid overspending. You will find out how great you will feel when you really make a determined effort to stick to your budget.

 

As you work on your finances, you may still make mistakes with your money, and that's okay. Sometimes you might be unable to resist the urge to buy something that isn't in your immediate budget. And sometimes you will feel like shredding your entire financial plan to bits because it just doesn't seem like fun.

 

However, as long as you keep your reasons WHY you want to be financially free in focus and make an effort to rebound quickly from your mistakes, you will be just fine.

 

It's all about assessing the mistakes you made, understanding why you made them and making a plan to avoid making them again. Then, you'll need to take those lessons and apply them for your future success. 



5. Start Investing

 

If you are serious about building wealth, then you are going to need to put your money to work for you. This is where investing comes in. However, before you put any of your hard-earned money into investments, it is important to have well-defined objectives.

 

Think about what the investment is for, when you will need your money and what your risk tolerance is. Investing is a long-term activity, so you have to commit to it if you really want to see your money grow. If you are worried that you will need your money in the short term, that is what your savings account is for; to put aside your emergency savings and money for your short-term goals.

 

You also want to make sure you have a basic understanding (at the minimum) of any investment you put your money into (e.g. the stock market or real estate market). Note that your plans to invest should be included as a part of your monthly budget where you allocate a certain percentage of your income toward your investment goals.

 

Also Read: Tips for Trading on a Budget




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6. Paying the Tax Man

Every citizen is expected to pay tax. This is an obligation that every citizen must perform as specified in the tax law.

 

Individuals tax obligations do change as his/her stage of life changes. However, at whatever stage we are in life, we must understand what the tax obligations are and try to fulfill them as required.

 

Evading tax payment can be dangerous to having or building a healthy financial lifestyle. This act, if detected can lead to a tax audit and if found guilty will attract the payment of the relevant taxes and penalties attached to it.

 

7. Get Insured


Practicing the act of insuring your valuables or taking up an insurance policy as at when necessary is an important step to take in building a healthy financial lifestyle. This is expected to help you cover for an unforeseen circumstance, provided it eventually occurs.

An insurance policyholder must understand fully the terms and conditions that apply to any insurance cover he/she is about to sign. This is to enable the policyholder to have a successful claim with the insurance firm. 




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If you are interested in an Income Expense Tracker that would help you monitor, budget and track your Personal Finances, personal finance experts like Elizabeth Ekpo (nee Udoh) developed the "Income Expense Tracker" which enables one to set short- and long-term financial goals. This Income Expense Tracker is automated and is a mainstream and a useful tool for people who wish to stay ahead with their budgets. If interested, kindly send a mail to programs@proshareng.com and business@proshareng.com. 



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