Lesson number 1 on maintaining good financial health avoids unnecessary debt. The best way to do this is to avoid borrowing money in the first place. Sometimes, it may be impossible not to borrow or worth taking on debt for a particular purpose. When you are borrowing, pay your debts as soon as possible.
Keep track of all your sources of income and expenditures. These two pillars across the aisle are critical to keeping your finances in order. If you don't know how much you're spending, it's impossible to cut anything out of the budget if necessary or reduce spending by any amount. And if you don't track your income sources, there's no way to tell which revenue streams are bringing in cash and which ones are emptying your pockets.
Save whatever you can, as often as you can. First, set up automatic savings plan to transfer money from your checking account to a savings account at regular intervals throughout the year. Second, try to save some cash every time you receive it- put away $20 or 10% of each paycheck into savings each week. This will add up quickly and give you a nice cushion of money to fall back on when expenses increase or revenue slows.
Make your savings work for you. Investing in something that brings in more income than the cost of capital, such as paying interest on a loan, is one way to maximize returns from your savings. Savings accounts are a safe bet, as their value is guaranteed not to diminish. However, if you have the opportunity to take some risks with your savings, put them into a diversified stock fund or an index fund.
Be an intelligent consumer. This is a no-brainer: Taking the time and effort to shop around for reasonable prices saves money in the long run. It's wise to do extensive research and take a look at reviews before making a purchase online or buying a car.
When you're selling something, be honest about its condition. If you're dealing with a few scratches on a TV, don't try to mislead the potential buyer into thinking it's brand new. Doing so will only backfire later down the road when they bring it back to you with complaints about why your TV doesn't work.
Never be scared to say no: a world of limited resources and infinite wants, some things simply can't be bought, and that's OK. Make sacrifices as necessary to achieve financial independence.
Know how much you can spend, and stick to that amount. When you're making a purchase, ask yourself what the total cost will be. Do I have enough in my checking account? Can I put it on a credit card with limited spending or set up an installment plan so I can pay off the bill within six months?
Don't borrow more than you need to. Many people borrow money for something that they can easily buy outright. For example, please don't take out a loan to pay for your groceries at the supermarket-put them back on the shelf and save up until you have enough cash.
Don't be afraid of negotiating. Ask for discounts when grocery shopping or buying clothes since stores often attract new customers or bring in repeat business. Ask for a lower interest rate when taking out a loan and outline the reasons you think they should accept your request.
Don't keep up with the people around you. We all have fundamentally different values, and one person's idea of happiness may not be the same as yours. Be happy with what you have, and remember that anything beyond that is just a novelty.
Lose the impulse buy If you're in a store and see something that suddenly seems like an absolute necessity, takes a step back, counts to ten in your head, and leave through another exit if necessary. Chances are you'll be just as satisfied on the way out as you would have been on the way in had you not made the purchase.