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Smart Financial Habits to Build Wealth

Smart Financial Habits to Build Wealth

• Updated: May 19, 2016

We all want to live comfortably without having to worry about our personal finances, and the easiest way to do this is to look closely at our spending habits. 

This may sound like a chore, but the good news is, it’s really not.  Looking at the way you spend your money can open your eyes to a wealth of possibilities for making it grow.  Taking the time to create a comfortable budget can put you on the path to financial independence.
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For most, the word budget brings with it a negative connotation, but that doesn’t have to be the case.  You can develop a budget that encompasses the philosophy of, “Work hard, play hard,” by following a few simple steps to cut frivolous spending out of your lifestyle while still allowing yourself the simple pleasures that you work so hard to enjoy.

Making a few simple changes is certain to build your wealth while giving you the opportunity to enjoy the money you earn.

1. Live Within Your Means

If you can’t afford it, don’t buy it.  It’s that simple.  If your job allows you enough to buy a practical car, don’t rush off and try to keep up with the Jones just to seek approval from people who do not matter.

2. Reduce and Remove Debt

Focus on removing debt from your monthly budget.  Choose one small type of debt, and knock it out.  Then, move to the next biggest debt in your monthly budget, and apply the money you freed up from removing your first debt to the new debt.  This laser focus on one debt at a time will keep you motivated and rewarded.

3. Prepare for Emergencies

Nothing can set you back more than unexpected costs.  The solution to this is quite simple; plan for the unexpected.  Keep money set aside in case something big like your refrigerator or freezer breaks.  This way you don’t have a financial meltdown.
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4. Save for Big Purchase

Don’t rush into big purchases.  Save up as much cash as you can.  If you do have to finance, at least do so with a down payment.  It will reduce the amount of money you spend in interest charges.

5. Dime Smart, not Penny Senseless

Don’t sacrifice quality to save a few bucks; you will end up spending more in the long run.  If you know a product lacks quality, don’t buy it because odds are you will have to buy the higher quality product later.  Spend the extra money and get what works so you only have to spend money once. 
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