Written by Ungku Aqeel (@ungkuaqeel418 in Stockbit)
How do you manage your finances well?
You've probably met someone who’s had a brilliant career during his/her youth, but eventually becomes less prosperous when that person gets older. This often happen to people with poor understanding of financial management and did not make any good investments in the earlier part of their life. Facing financial difficulties at an old age is a serious burden, hence,understanding money management at an early age is important.
Here are some good financial management tips to to help you earn enough where you’re older
1. Set clear financial goals
The first step to good financial management is to clearly define your long-term goals (10-20 year), A well defined goal will give you clear direction for your future which will give you a strong sense of self-motivation to apply good habits of financial management. Such motivation will put you in the spirit of getting a prosperous life that you want in the future.
2. Allocate funds by priority
Begin to make a clear list of how you want to distribute your money. Remember to prioritize your needs over your desires. Prioritizing your needs over desire will help you save money more effectively. The way you allocate your money should be realistic in order for it to be achievable.This allocation is very important and must be done carefully, so that all needs will be well fulfilled.
3. Reduce consumptive habits
Reduce consumptive habits by prioritizing non-desirable needs, as explained in the previous point. Reducing consumptive habits means reducing the amount of expenditure on things that are not important. By reducing this habit, you will be able to save your money for more productive needs.
4. Regularly allocate funds for investments
Reducing your consumptive habits will help you to efficiently accumulate funds for your savings and investments. You can invest in various financial assets such as deposits, mutual funds, stocks, or real assets such as property. Of these financial asset selections, stocks is an investment options that has attractive long term benefits. Other than its lucrative potential, stocks are also easy to get started on as everything, from opening an account to information gathering and trade execution can all be done at your fingertips online
All you need is a smartphone or a computer with internet connection to start making investments in the stock market. Shares represent long-term investment instruments, so the benefits can also be perceived in the long run.
A simple method of investing stocks as a precursor to managing finances is to buy stocks on a regular basis, weekly or monthly. You can start by buying reputable corporate stocks you know first, because the probability of gaining profit from this stock in the long run is very high. Avoid day trading as it can be psychologically draining. This is due to the characteristic of stock prices that tend to be volatile in the short term. Only apply for long-term benefits.
5. Do it with discipline
The key to successfully financial management is discipline. You need to be disciplined and organized in managing finances. Otherwise you may lose control. Set your priorities. This helps you focus on your financial goals, so we can be more disciplined and more stringent in meeting these financial priorities.
6. Make it as early as possible
Do not procrastinate implementing good financial management, the sooner you start the greater the benefits you will get in the future.