Warren Buffett, a top American investor, says, “Do not save what is left after spending; instead, spend what is left after saving.”
This quote is not merely a statement; it is the secret to becoming wealthy. As long as you aim to be rich with financial goals in mind, you do your best to make money and build your savings.
Though it may look like a thing that is easier said than done, you can accomplish it by formulating and sticking with an effective plan to use your finances. And yes, you also need to adopt the best financial approaches for this purpose.
So, how do you build your wealth plus save money to secure yourself financially? Regardless of the age or income factor, everyone asks this question at least once in their lifetime. And, probably most of you reading this article are also here to get an answer to this question. So here we list down a few healthy investment habits that can help you grow financially.
Formulate an effective budget plan
Once you get to know about your earning and spending, you can take the next step to plan your budget. Your idea should be to come up with a practical and realistic budget plan. These two factors work together to make a budget plan feasible.
Include the premiums or other bills that you pay every month in your budget plan. You are likely to engage in celebrations in certain months. Include the possible expenses that you are likely to incur in your budget plan.
Take some time to analyze your expenditure
Review your bank statements every six months; the deduction of unnecessary expenses from your bank account may surprise you. If you see a deduction, take some time to assess it. Is it mandatory or necessary?
Try excluding the deductions linked to insurance and monthly subscriptions that are not necessary.
Monitor your earnings and spending
Keeping an eye on your monthly income and expenditure at the end of a month or the beginning of a new month is a good habit. It tells you a lot about both your earnings and spending habits. Ideally, your earning should be more than your spending. Otherwise, you would have to rely on credit card payments to make both ends meet.
If you wish to grow financially through investments, you need to avoid depending on either credit card or overdraft.
Do not let your finances remain idle; put them to work
If you have some cash aside, do not let it remain idle. You can make more money from it by investing it in suitable schemes. However, do not forget that investing money can be risky.
That said, you can mitigate the risk factor to a large extent by covering your investments through ethical sharia-compliant finance platforms such as Qardus.
Alternatively, you can also consider using other such platforms. If you lose your investments, this step will help you cope with such a situation.
Have debt or outstanding credit card payments? Pay them off at the earliest
You may borrow money from a lender or use a credit card to either make payments or pay your bills urgently. But in return, you need to pay off the debts in the form of equated monthly payments.
No doubt, the rationale behind paying the whole amount in installments is to ease the financial burden. But if you have more debts, it can put a financial burden on your shoulders. So, think about paying off an additional amount of money along with the monthly investments if it is possible.
This way, you would be able to ease the excess load of debt and eventually pay it off. You can begin by paying off the higher debts and then follow the descending order of debts.
Think about debt consolidation
Debt consolidation is a good idea if you wish to reduce the rate of interest while paying off your existing credit card balance. One of the best things you can do is transfer the balance to a credit card issued by another provider.
For this purpose, you can choose a credit card that does not charge you any interest rate for the first six months for transferring the balance of your previous credit card. However, try not to make any purchases by using the new credit card to prevent building up debts with it.
Use tax exemptions as much as you can
When you pay a certain percentage of your tax (between 20% and 40%) each month towards your pension, you become eligible for tax exemptions or relief.
The percentage of money deducted depends on your age as well as monthly income. You can also claim tax exemptions on other expenses. These include flat-rate allowances, health expenses, and PHI premiums.
Focus on accumulating savings
Accumulating savings is a vital step towards securing your financial future. While it is natural for some people, others need to exercise discipline to save money. If you wish to build up your savings, set a goal and plan your things accordingly.
Your goals may range from purchasing a house to your wedding or retirement holiday. Set up a direct debit account and make certain the savings go directly into it. By doing so, you will be able to keep track of the savings that build up over time.
Build a buffer fund
A buffer fund is a safety fund or an emergency fund that you save continually to save yourself from seeking help from others when you happen to encounter a sudden financial crunch.
Getting in the habit of saving a few pence every month in your buffer fund account can help you to cater to any sort of emergency. Also, God forbid if you happen to lose your job, then this buffer fund can help you survive a period until you fetch a new job for yourself.
So, these were the top eight healthy financial habits that can steer you through the path of building up your wealth. So what are you waiting for? If you have not adopted these habits yet, try doing it now to reap the benefits.