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money matters

6 Practices You Should NOT Adopt To Flourish And Maintain Your Wealth

Keep yourself and your family financially safe!
11 Jan 2021, 11:10 AM

6 practices you should adopt to flourish and maintain your wealth

Image via The New York Times

It’s a common misconception that your income level and material possessions define your wealth. But wealth isn’t defined by how much you earn—it’s about how you grow and save your money to meet your changing lifestyle and your needs.

Here are a few steps you can take to ensure you’re keeping up your financial health:

#1 Create a financial road map; don’t assume you can manage without a plan

The first step to having healthy finances is by creating a road map. You need to map out how much you must earn to be able to support your lifestyle, or how to alter your expectations according to your income.

For example, purchasing a house—would you like a condo in the city or a nice semi-D in the suburbs? Take into consideration the cost of purchasing and maintaining it. Now, can your current income support what you’re hoping to achieve? If your dream home costs RM2 million but your income is only RM2,000, you won’t be able to get the loan approved. 

#2 Follow the 50-30-20 Golden Rule; don’t just wing it

So, now you’re wondering how you’ll need to budget everything accordingly. Just follow the rule of dividing your monthly income as below:

  • 50% into your needs—commitments, bills, necessary expenditures, and food.
  • 30% into savings—both short term and long term
  • 20% into wants—this means your other additional expenses

#3 Re-evaluate your wants and needs; don’t mix these two up

What you want versus what you need are very different. For instance, you need a home and food. Meanwhile, you want an expensive condo with a great view and fancy food in famous restaurants.

Once you understand your budgeting, you’ll know what you actually need and want better. Make sure you don’t get sucked into the latest deals for all those unnecessary things and abstain from splurging too often.

#4 Cover your risks; don’t live life with a blindfold on

The most important thing about being financially responsible is being able to cover the risk of losing your income or having enough funds for emergency situations.

Though you’ve reserved about two to six months’ worth of emergency fund, it still might not be enough for certain situations such as losing your house to fire, having your car stolen or falling terribly ill where you require large sums for treatment and medication…

…which is why it’s vital that you get insurances. There are many products available these days and you can even customise them to suit your lifestyle and needs.

#5 Keep clear of credit cards and loans; don’t simply sign up for one!

If you’re one of those people who can barely manage your finances and fall for temptations very easily, then avoid signing up for extra credit cards! It’s not a joke because once you have overdue credit cards and paying only the monthly minimum, you’re on your way to a vicious cycle. The same goes for loans.

This is because the interest rates are usually very high. Besides that, there are loads of terms and conditions involved, always do thorough research first.

#6 Manage your debt the right way; don’t keep avoiding it thinking it’ll go away

The ‘right way’ is subjective to each individual’s debts and situation. However, you still need to be responsible for it and repay accordingly.

If you owe a family member, create a repayment plan that works for both parties. Meanwhile, if it’s a credit card debt you’ve got, there’ll be an officer assigned to your case. You just need to negotiate with them. Of course, you don’t want to push it because each bank has their own rules too.

The main point here is to ensure you’re debt-free!

Now that you’ve adopted a proper system to managing and tracking it, gotten rid of some bad habits, and also ensured that you’ve covered your risks, you’ll realise that you no longer stress as much as you used to as well.

Make sure to share this article with some loved ones who need it too.

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