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10 Basic Decisions To Improve Your Financial Future

By Cristian Bustos. Originally published at ValueWalk.

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There are several ways to boost your personal finances while keeping an eye on the future. Most of them sound easy, but often people find it hard to apply them and instead come up with excuses that will in the end derail their plans.

So, here are 10 basic decisions to improve your financial horizon that are absolutely worth trying. If you’re looking for retirement in the long run, you can’t go wrong by applying them with discipline and courage.

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  1. Spend Less Than You Earn

It sounds quite easy —it’s something you have read in many articles and personal finance media posts, but people still don’t apply it.

You must be resolute not to spend more months in the red or not to withdraw your savings to cover your discretional expenses —entertainment, clothes, and things that you might not really need or want. Give up the excuse that you have to make sure you live in the moment.

  1. Save Before You Spend A Single Cent

Millennials are some of the most careful generations when it comes down to money and even 83% consider that they could save more. However, out of this percentage, just a few of them don’t go beyond mere consideration.

A good decision is to save a percentage of your income —say, at least 10%— before thinking about spending money or maintaining your lifestyle.

Alternatives such as automating savings in your bank account make your life easier and prevent an excuse from taking precedence over your saving decisions.

  1. Get Debt That Generates Income

Aspiring entrepreneurs must secure funds to start all their business ventures, and having no money to do so is not an excuse. This is so because, today, there are multiple options to secure capital to start the ball rolling.

Online business loans are a very interesting source of financing that you can use to start from scratch. Why else would you acquire this debt as opposed to a credit card?

These types of loans are classified as good debts since you will be generating income from them and consequently positively impacting your finances.

  1. Budgeting With An Error Margin

A budget is the best start to manage your personal finances. However, many people lack the discipline, they do not know how to do it, or don’t see any value in it —and they prefer to “go with the flow.”

Budgeting for a project or your personal finances is the best way to control your money, from income, fixed expenses, and savings, to discretionary spending and more. In this regard, your budget must be flexible and contemplate any unexpected expenses and actual extra income that may emerge.

  1. Identify Financial Targets

You must take the time to set your goals and start budgeting, saving, and spending accordingly. Goals are also a motivation, and depending on how much you want to achieve you will have the discipline to succeed.

Bear in mind that a financial goal is not winning the lottery or improving your wage —you must devise the way you’re going to spend the money and the resources you have at your disposal, for how long, and what you expect as returns.

A good way to go about your financial goals is defining them according to a period: short-term, mid-term, and long-term.

  1. Assess Your Financial Growth

The only way to improve something is to be able to measure it, so you must be open to evaluating yourself —by asking yourself how your financial performance was, what you spent your money on, what you invested in, which purchases were emotional, and which decisions helped you reach your goals and which didn’t.

You can additionally come up with an Excel table to keep track of your developments, compare financial accomplishments between periods, how much expenses increased in specific rubrics, etc.

Undoubtedly, this is the best course of action to improve your finances immediately.

  1. Pay Your Bills And Get Rid Of Your Debts On Time

Your financial responsibilities are of the utmost importance, so paying off your debts – especially those that do not generate income and have a high-interest rate— should be your priority.

At all times, you must avoid paying interest in arrears, which little by little rack your personal finances.

Paying your bills on time every month, or even in advance, will allow you to secure some savings that you could use as a margin of error when creating budgets. Later, you can invest.

  1. Build A Solid Credit Reputation

Paying your debts on time has a direct effect on your credit reputation. Investment opportunities will open up every time you pay on time, due to a solid credit score.

Being decisive to pay your bills on time and stick to healthy debt habits will pave the way to a bright financial future. Reputation, and more specifically in the field of credit, is absolutely key to applying for financial products that can open up a myriad of opportunities.

  1. Diversify Income Sources

As a rule of thumb, do not rely on just one source of income, namely your salary. According to a survey, 71% of Millennials think it is important to become an entrepreneur.

So, you can invest your salary in other sources like the stock market, real estate, and in your friends’ companies —this way your sources will be diversified and the risk will be substantially reduced.

  1. Invest In Your Financial Education

Finally, you should try to educate yourself in personal finances, money management paradigms, and financial products. The biggest mistake people make, and the one that affects their finances the most, is ignorance.

People make important decisions with little or no information because personal finance is something that does not concern them or requires a high degree of prior knowledge.

So, invest in your financial education —either through books, courses, seminars, and expert advice that help you understand how money works and how you can get the most out of it.

Once you make these 10 decisions, your personal finances will be positively impacted and you’ll be building for the future. You just need to start today.

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