7 Tips for Developing Healthy Financial Habits

Money is the means to get most of things done in this world. Today our earning levels are much more than our parents and grand parents. Still many of us find ourselves deeply in financial mess. It is true that the costs of living have also advanced along with the income over the period, but the kind of mess many of us are living is not justified when we see there are many of us who are living financially comfortable lives, sometimes earning far less than the ones in deep mess…!

The reason I believe is our habits. With the credit cards and shopping malls all around the world, people have developed the wrong habits of spending more than they earn and impulsive spending.

The solution is to develop healthy spending habits and the habits to save more.

Below are seven tips for developing healthy financial habits.

1. Avoid Malls. Malls are designed to seduce people to spend more and more. Very few people can resist the temptation to spend on things that they don’t need, whenever they see them lying around in shopping malls. And most of the things are over valued at malls. Many people just go to malls to kill time and while on their way back they are loaded with the stuff they don’t even need.

2. Avoid hoarding the stuff which you don’t need. Refrain from hoarding the stuff which you don't need in near future. Most of the times when we go to market, the first thought on seeing some things is we might need them some day. Be aware of these thoughts and avoid hoarding things which you “think” you might need some day. Buy only the things which you know you truly need now…!

3. Eating out less frequently. It is good to avoid eating out as much as one can. There are two reasons for it- it is unhealthy to eat outside and eating out frequently can leave a hole in your pocket.

4. Don't overdo partying out. One of my friends who earns good income is always in debt due to habit of partying every week! Almost every week his group goes to one of their favorite pubs or restaurant and spends lavishly. Sometimes it is even twice or thrice a week. Watch out for such habits.

5. Conscious vacations. Vacations are a time to enjoy with your dear ones or alone. Make them more conscious. You don't always need to go the expensive places and you don't always have to stay in best hotels. For every expensive vacation there is an economically sensible alternative. Look out for such alternatives.

6. Less luxury expenditure. We all love luxury. But it is best to refrain from luxury expense as much as possible in best of your financial interest. Buy good quality stuff, but just don’t buy for the sake of luxury. One of my friends always used to fly business class even for one hour journey. He used to have all the latest gadgets in the market. He changed his car every couple of years. Following recent sub-prime crisis he had to sacrifice some of his habits.

7. Regular Savings. Each month put a portion of your earnings in a systematic investment plan,a recurring deposit or a similar scheme. In this way after sometime you will have a good amount in your savings. If a person will less liabilities is putting just 10% of his monthly in hand salary in a recurring deposit, he would have saved equal to his one month's salary in 10 months plus would have earned some interest on top of it. Money saved in such way serves one during bad times.

These are few of the tips which I have learned through my experience or watching the people around me. Hope they prove valuable to readers as well.

This post was written by Naresh K. Singh.
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