Financial fitness, like physical fitness, is mostly about good habits. Here are some habits to adopt for better financial health.
- Know how much you make and how much you spend
Knowing how much you make every month is where you should start. If you have a fixed salary, it is easy. More difficult if your salary depends on commission. Even harder if it is purely based on them. If you work in a cyclical business, then you will probably have highs and lows throughout the year.
- Spend less than you earn
This habit is at the core of all good financial management. It is how rich people get rich. When you spend less than you earn, you save. And what you save becomes wealth. First, you need to know how much you spend. You need to start to register all your expenses. Starbucks, Movie ticket, Milk,… , everything goes into it. The first three months should be taken as “survey months”, I am sure you will be surprised on how much you actually spend on certain things. The first law of gold in the amazing book “The Richest Man in Babylon” Says to save 10% of your income. The 50/20/30