Good Financial Practices
Practicing money management with caution in our daily lives can be rewarding.
Just as we have good living habits enriching our health, good financial habits can enrich us with wealth. When it comes to good living, most of us are aware of the habits we need to follow, but when it comes to creating wealth, we aren’t quite sure about what good wealth creating habits are about. In this article, we will be telling you about some very simple and easy to follow habits that can make all the difference to your wealth and finance.
Hard-working employees and small businessmen often wish strike a windfall. These ordinary men and women may be earning good money or generating a decent business return, but still they find it hard to call themselves wealthy. The problem here is not lack of income but the inability to convert income into wealth.
To understand how we can do that, we have to take a look at the money we have at our disposal, from a very different perspective. Most people earn money to spend it. Money once used is gone forever. In order to make ourselves healthy, we need to make money come back to us.
Let’s put a simple and easy to understand analogy. Think of a businessman who makes his employees work for him so that they generate good returns for him. Now imagine yourself as a businessman and the money you own as your ‘employee’. Applying the same principle, you employ your money to work hard and generate more wealth for you! You can invest this ‘employee’ to work in different investment plans so that it gives you return just as an employee would if you were in business without all the added headaches. In fact, money can be a very good ‘employee’ with no demands for a salary, a raise or even leaves.
So the first step to cultivating good finance related habits is to understand that money can work as hard for your returns as you do yourself. And more the money you ‘employ’ or invest in good productive ventures, the more returns you get. And every dollar you use to finance a new project or add to your investment plans goes on to building your wealth. We often spend money on things we do not even need simply because we like it or because it’s what our neighbors have or because the marketing glitz has got us. Each buying impulse should be weighed against the momentary pleasure it gives against what that money could return to you in the long term.
An easy way to start practicing this habit is to visualize how life would be if you had the option to chose between wealth and consumption. Whenever faced with a buying decision, remember the words ‘spent’ and ‘invest’ can make all the difference.
At the end of the day write down the number of times you gave in to your buying impulses. The day your diary shows only a good investment portfolio and no unnecessary expenditures, you know you have got into the good habit of creating wealth.