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We all are very particular about how to save money, where to channelize the savings to fetch the appropriate returns that will beat the continuously rising balloon of inflation. We keep thinking and planning whether what can you cut down from the lists of things you need to spend money on- to save some more.
If you ask me, I always suggest as to what we should do to increase wealth. My previous article on How to Manage Personal Finances illustrates the same. But how about we think the other way round. Instead of discussing what should be done, we should ask what shouldn’t be done or avoided?
Let us be more illustrative. We always get attracted to the boards displaying “1000$ Shirt for 700$.”, thinking that we are saving 250 bucks. Although you should see it this way, that you have not saved 250 bucks but spent the 750 bucks.
There can be many examples to explain the above. But the matter of the fact is, there are some Financial Rules you should never break, they are -
1. Never Buy a Depreciable Asset on Credit
There is always a scheme like a car loan. But do you ever think of the fact that you are spending on a type of asset, the value of which will decrease in future- without giving you anything in return (except for Luxury). It is not always bad until you are buying an extremely necessary asset.
2. Don’t Buy Things That Harm Your Health
I am not wrong if I will say Alcohol consumption and Drug addiction are the most common problems among the youth. This will affect health in adverse ways leaving the person in the utmost danger, yet we continue making such a purchase.
Try your best to reduce the consumption of such things and eventually if you want to, you will be able to quit this habit. Because the younger the age, the long-lasting negative impact it will cause. So, make a change now.
3. Always Acquire Assets, Never Liabilities
Assets are things that will pay you in the future in the form of returns. Liabilities are obligations that you will pay in the future in the form of interests. Acquire assets in exchange for assets but not in exchange for liabilities (unless it will interest on liabilities less than returns on assets.)
4. Don’t Risk Your Name to Become Rich Quickly
The biggest asset is your name. Never risk your name into something which can be proved to be illegal just because it is something which gets you wealthier in a short period. Be careful and give it a thorough thought before you make any decisions in a haste, as you may most likely regret it in the future.
5. Try to Cut the Expenses
Try to cut expenses over Electricity bills, frequent coffee engagements, subscription services, being Brand conscious, etc. This may seem like a very small cut to you, for instance, turning out the lights and fans (or any other electrical appliances) when not in use, or unplugging your charger from your devices when they are fully charged, etc. can help save electricity and may prevent a high electricity bill.
Attempt to save 5% each time than that of your previous spending. At the end of the month, you will realize you have saved a lot. Speaking with experience!
6. Build Wealth With Assured Results
Many times it comes to a situation wherein you may question where to invest your income or where to park excess funds so that it will increase the wealth. Several financial advisors will guide you with this issue. However, you should also do some of your research, so that you are not duped by the fraudulent people.
Before starting any investment study the nature of investing (Long Term/Short Term), Risk and Return Ratio, etc. You can refer to my Article on Beginner's Guide to Investing for more Details.
Financial Discipline - Everyone Should Possess!
There is a proverb: A Paycheck comes like a Tortoise and Goes Like a Rabbit. If you also feel the same, you may be breaking any one of the rules stated above. Financial Discipline as a habit should be adopted by each one of us. It will take time to adapt to this habit, it won't be immediate but it should be practised definitely!
Written By – Utkarsh Samaiya
Edited By – Ivanova
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