It’s a new year and with it of course, come some new resolutions on how to improve our way of life. A chief aspect that governs our lifestyles is our finances, and so outlined below are five suggested steps or areas which we need to either initiate, maintain or improve on in that particular regard.
It would surprise many people to discover this but saving is not something that many people do. Like all good things that improve us, for saving to be effective, we need to adopt it as a habit, a mindset of sorts. Deciding that every income we get will be levied by a certain percentage which goes into untouched savings is a great first step. Follow this up with something methodical, for example, installing a standing order on your banking account so that every inflow of income that goes through it has a percentage deducted to a fixed deposit account. You will be impressed at how quickly you build your nest egg, and best of all, once the process is a habit, it simply gets stronger, securing your future.
It is important to make sure you have filed all your tax returns, whether it is on income, property, or any other dues. This is vital because improperly filed taxes have a nasty habit of coming back to haunt you, and tend to gain interest as well. Make sure you do not owe the tax man anything.
Debt or Credit Management
Just like unpaid taxes, bad debt can be a terrible burden, particularly with rising interest rates. Calculate your total debt and start dealing with it promptly. Know to what extent you are in the red. It will give you perspective let you have a handle on what your next move should be, and it will also help you monitor interest and keep a decent credit rating, which is vital.
You will also need to look more carefully at how to invest whatever you are earning. Investment involves risk, of course, but calculated risk into assets and blue chip stocks are a safe way of managing your investment efforts. Look at solid and credible mutual fund managers as well, but do find a way to grow your hard-earned income that is significantly more effective than the comparatively low interest it will earn sitting in the bank.
Diversification of Income
Because of the current economic climate, never has the importance of income diversification been so high. Even when things improve with the global economy, having a diverse income base is always beneficial to ones lifestyle and welfare. It might not seem such a straight-forward option but you would be surprised at the areas that you can delve into and add to your own personal cash flow just by setting a few hours aside to develop a skill that is marketable or that fills a demand in the economy. Never has the proverbial statement “do not put all your eggs into one basket” been more relevant.