Financial well being can be defined as the ability to make wise decisions on earnings, savings and credits that enables one to attain his personal goals while enjoying a comfortable lifestyle. This seems like utopia, but is easily achievable. All it needs is a little bit of introspection and careful planning.
Here are a few tips for financial well being that might well be your stepping stone towards financial independence.
The first step to financial well being is to take stock of what you have. Make 2 columns - Put all your assets on the left column and your liabilities and debts on the right. Assets could be money in the bank, a house in your name etc. Liabilities are that part of the income that has to be paid. For instance, mortgage on your house, insurance premiums, credit card bills, loans and advances etc.
Subtract your liabilities from your assets. If the balance is on the negative side, then it needs a correction, immediately. Clear all your debts as soon as possible and do not take any fresh credits. Once you are on the positive side, you need to pay attention on how to keep it that way, while investing and saving consciously, by setting goals.
Prepare a list of long term and short term goals. Long term goals are mostly for retirement and do not change. Short-term goals are for the near future between 1- 5 years term. They need to be revisited once very while.
The best way to financial discipline is to maintain a daily account of all your spending. This helps you to see where you spend most of your cash and cut them short immediately.
Learn about investing and the power of compound interest:
Look for various investment options such as mutual funds, based on your risk appetite. Subscribe for a good investment magazine that keeps you updated on investment options across the spectrum.
Enjoy the small pleasure of life such as hiking on the nearby countryside, reading a book for your child or spending an evening with your parents or close friends. This will not only be lighter on your pocket but is also more satisfying than an expensive outing.
Repairs are more expensive than good maintenance. Hence, keep your expenses low by maintaining your vehicles and house in good condition. Believe me, they fetch brownie points.
All said and done, do not be frugal to the extent of misery. Remember that you are saving to be happy, not miserable.