Only earning money, can never make you stable financially.
We are talking of the financial confidence, and the sense of financial security that you have to build, so as to gain enough control of your finances, and see it grow for the real good.
In this post, we are spreading out a few money actions, for you to take, to boost your money confidence, more than ever.
Remember, more money you have, more responsible and confident you have to be of your money, and put it to some more lucrative use!
Give yourself a budget:
Why does the conversation about money, always start with a budget? Why do you need a chart, table or a list to improve your financial situation?
The reason for having a budget, is to increase your control over your finances, and thereby have a taste of confidence and satisfaction. It’s not that you can’t live without a budget. But it’s the confidence, that you have your finances in line, is really a matter of importance.
The best confidence booster budget is Backward Budget, if you are eager to save money and build a low expense portfolio.
In this budgeting format, you will be keeping aside a certain amount of money from your paycheck, each month, for your top most desired obligation. That can be savings, debt payments, your mortgage payments, child care costs, or anything that is otherwise hard to fulfill, after taking care of day to day expenses from your income.
In Backward budget, you will be hence separating the amount first, you want for a special purpose, from your paycheck, and then carry on with your other general monthly expenses.
Understand good debts and bad debts:
Your financial confidence is also manipulated by what type of debts you have. You are not asked to stay away from debts in the most generic sense.
It’s just that you are being told to understand how debts work, what debt is good, what is bad, and what type of debts should you have based on your stream of income.
Bad debts are made up of credit cards, payday loans, personal loans, and other such unsecured consumer debts. More of these debts you have, worse will be your confidence about your personal finance, and less will be your ability to save money and build wealth.
Good debts on the other hand carry comparatively lower interest rates than that of bad debts, and have an asset factor attached, to the debt vehicle.
The best example of such good and secured debts, is a mortgage.
Therefore, try to have only good debts around you, and avoid having too much of unsecured consumer debts. At times, however, a credit card or a personal loan can also be beneficial when used the right way.
But, that’s up to you, as in how you want to utilize the debts. In the mean time, staying away from too much of these unsecured debts, is a better idea.
Calculate your net worth every now and then:
Your net worth is the actual wealth you are in possession of.
You can calculate it by subtracting your total debt and money you owe to people or organisations, from your total earning and owned assets.
Asset is a broad term, and it also includes your built in equity on secured debts, like mortgages or car loans, and also your savings and certificate of deposits.
To keep in mind, your net worth is your actual wealth.
Calculate it time to time, to know where you are standing.
Practice good habits and say no to indulgence:
Nice money habits are important to help you gain financial confidence.
You need to be sure that you are not wasting away your hard earned money. Therefore, you should limit your expenses, if your income is not adequate to maintain luxury transactions, and savings at the same time.
There is absolutely no shame in leading a bit frugal lifestyle. There’s no guilt in knowing that you can’t spend much. Consider it to be somewhat like you are confident, that you can spend only up to this much!
So, try to cut down on frequent eat outs, unhealthy lifestyle, boozing, costly vacations, and things like that. Also, try to minimize your credit card usage, and instead shift to liquid cash if possible.
Work with professionals in solving financial problems:
This last part is the best way to gain financial confidence.
You are always in a safe position, when working with professionals. Be it surfacing debt free solutions, investment opinions, or even choosing a highly optimized pro level budget plan.
Whatever it is, the level of confidence you will receive after having a detailed discussion with a professional, will always remain unmatched.
And, most importantly don’t hide financial scars and setbacks. Search for professional suggestions, as soon as possible.
Stay happy forever.
About the Author: Andy is a blogger and financial writer associated with the OVLG. He is a debt expert and a member of several online forums where he shares his advice as well as tips to lead a financially independent life.