5 Good Money Habits to Learn Before You Are 25
Do you want to lead a stress-free life and have little to no worries about your money problems? Do you wish to be financially secure and have sufficient funds for anything you desire? Here are the 5 Good Money Habits that you must learn before you are 25 which will help you a long way in life:
Good Money Habit #1: Having Health Insurance
Are you among those who wonder whether they need health insurance because you view it as an additional expense? Health insurance, however, is a crucial financial safety net that can shield you from the strain of unforeseen medical costs and keep you from blowing through your hard-earned money. Health insurance is a priceless resource that provides financial security and peace of mind in an uncertain world.
Additionally, health insurance promotes routine checkups and preventive care. You can address concerns before they develop into severe and expensive conditions when you have regular testing and early detection of potential health issues. You can achieve better health outcomes, and it also helps you avoid more costly future medical treatments.
Solution: Check out the article on how to choose good medical insurance according to your needs.
Good Money Habit #2: Investing
Investing is one of the main habits which will distinguish you from others. It shows how much you are concerned about your safety in the future and that you are willing to delay instant gratification for a stress-free life.
Investing is a vast topic on its own and requires quite some effort. But these are only one-time actions. Once you get the hang of it, you will find it a piece of cake.
There are new financial needs that arise as a person matures through life.
Typically, it begins with a home purchase. A sizable down payment is necessary, even if one borrows money for a home. An individual can accumulate the corpus needed for the down payment by investing in many assets.
The college education of children might be another crucial investment objective. Given the high college cost, parents can begin saving for their children’s college costs even when they are still very young. In addition to these financial objectives, retirement is a constant financial objective for people throughout their working life.
Understand the whole picture and get started on investing today. If you do not know where to start, check out our Financial Education Series here.
Good Money Habit #3: Frequently Checking The Credit Score
One of the least talked about money habits but quite significant in itself. Everyone comes to a point in life when they need a loan for something. It could be a car or a house. For some, it could be a private jet.
For banks to have assurance that you would pay back the money, they rely on credit scores.
It is a number that shows you how much reliable you are. The higher the number, the better.
But here comes the problem. Many incidents of fraudulent loans getting disbursed on somebody else credit score are common. And when those scammers intentionally fail to pay back the money, the person with the stolen identity gets affected. It might lead to not qualifying for your dream house or your car.
So a good idea is to check your credit score regularly. You can use the application OneScore to do the following activity and view it at least once every month.
Good Money Habit #4: Emergency Fund:
Have you ever faced any urgent situation which required quite a sum of money? If you ever found yourself short, you would have called your relatives or any known person seeking help.
Now, let’s be honest. It is not a pleasant situation to be in.
Start building your emergency fund to have a buffer if any need arises. Additionally, an emergency reserve grants some financial latitude. The ability to respond to unforeseen circumstances without jeopardizing my budget or long-term savings objectives is made possible by having that cash on hand, whether for an essential house repair or a last-minute travel obligation to attend a family function.
Although it takes effort and discipline to accumulate an emergency fund, building it is a worthwhile investment in your future financial stability. Start by establishing attainable savings targets, then steadily increase the fund over time. Remember that even modest payments over the months or years can build up and make an impact when you need it most.
I recommend you to have 4-6 months of your income as a buffer for the emergency fund so that you can deal with potentially all the situations.
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Good Money Habit #5: Maintaining The Standard Of Living
Have you finally got the job you were working so hard for? Does it feel good when your salary is credited every month? And you wonder, Hmmm, what are the things I can buy to make myself happy? The sudden rush of spending the money and living way beyond your means can quickly come back and bite you. It does not make sense to spend so much money unless you have ensured that the money flow will never stop.
You were already living a meaningful life even before getting flushed with cash. More money will not always be the answer to improve the meaning of your life. Use the money to make the right decisions, like investing for the future, and reducing present days expenditures.
Not overstepping the boundaries does not mean living life the frugal way. Spending money on things you hoped for is not a bad thing. It’s just that you need to distinguish how much to stretch yourself.
If you have the money, you can easily buy a 2Cr flat; or a 5Cr worth of an apartment if you stretch your purse a bit. You need to understand which of the two will have the lowest implication on your finances in the future.
Practice delayed gratification for the maximum return on your money. And if you can learn this early in your life, you will have much better results when you step into more significant roles and bear a family.
Like any habit, you must practice good financial habits consciously for a while till they become a way of life for you. These habits will help you control your personal finances and secure your future.