When you are financially stable, you feel confident with your financial situation. You don’t worry about paying your bills because you know you will have the funds. You are debt free, you have money saved for your future goals and you also have enough saved to cover emergencies.
Here are seven habits that can help develop your personal financial stability;
- Make savings auto magical: Saving should be everyone’s top priority, especially if you don’t have a solid emergency fund yet. Make saving the first bill you pay each payday, by having a set amount automatically transferred from your salary account to your savings (try an online savings account).
- Control your impulse spending: The biggest problem for many of us. Impulse spending, on eating out and shopping and online purchases, is a big drain on our finances, the biggest budget breaker for many, and a sure way to be in dire financial straits. See Monitor Your Impulse Spending for more tips.
- Evaluate your expenses, and live frugally: If you’ve never tracked your expenses, try the One Month Challenge. Then evaluate how you’re spending your money, and see what you can cut out or reduce. Decide if each expense is absolutely necessary, then eliminate the unnecessary. See How I Save Money for more. Also read 30 ways to save $1 a day.
- Keep your family secure: The first step is to save for an emergency fund, so that if anything happens, you’ve got the money. If you have a spouse and/or dependents, you should definitely get life insurance and make a will — as soon as possible! Also research other insurance, such as homeowner’s or renter’s insurance.
- Use the envelope system: This is a simple system to keep track of how much money you have for spending. For example, you can set aside three amounts in your budget each payday; one for gas, one for groceries, one for eating out. Withdraw those amounts on payday, and put them in three separate envelopes. That way, you can easily track how much you have left for each of these expenses, and when you run out of money, you know it immediately. You don’t overspend in these categories. If you regularly run out too fast, you may need to rethink your budget.
- Pay bills immediately: One good habit is to pay bills as soon as they come in. Also, as much as possible, try to get your bills to be paid through automatic deduction.
- Look to grow your net worth: Do whatever you can to improve your net worth, either by reducing your debt, increasing your savings, or increasing your income, or all of the above. Look for new ways to make money, or to get paid more for what you do. Over the course of months, if you calculate your net worth each month, you’ll see it grow. And that feels great.