This article has been reviewed by Sumeet Sinha, MBA (Emory University Goizueta Business School). Should you have any inquiries, please do not hesitate to contact at firstname.lastname@example.org.
Want to know how to be successful and financially independent? Successful people always seek to learn more. Here, in this article, you can learn the details of being financially successful.
Tips For Financial Success – Get Started With Your Financial Planning (Jump To Section)
You may think that financial success is all about earning handsome money. But let me be clear on one thing, it is not just about earning huge sums of money or generating the best return on your investments. Often, people confuse being well settled with a financially successful life.
Well-settled people tend to enjoy the understated luxuries in their lives like exotic holiday destinations, luxurious cars, smart devices, prime location penthouses, mansions, etc. But even after being “well-settled”, they take huge bank loans for the higher education of their children or to get a new house in a better location. With every new loan, comes the added responsibility of paying it back. This may lead to further financial stress. If goalposts change, the definition of financial success also changes.
If you are thinking of how to lead a financially successful lifestyle, this article may just be what you are looking for. We have mentioned a lot of sound advice as well as useful tips for financial success. Implementing these tips will certainly show a considerable change in your life for the better.
So let’s get started.
What Is Financial Success?
Financial success is not as complicated as one thinks, it can be achieved by following some good practices that will help you to make your money work for you. One way to define financial success is financial freedom – i.e. when your investments start generating the same or more than what you earn in your full-time job (or enough to cover all your expenses) is known as financial success.
When can you call yourself financially successful?
Being financially successful is always rewarding. Some people call themselves financially successful when:
- Without a car loan, you can buy your favorite car.
- Without stressing about mortgage payments, you can buy a nice house for your family.
- Without thinking of loans, you can provide your family with world-class medical treatment if needed.
- You can avoid buying unnecessary things.
- You know where to spend money.
- When you understand the education you are providing to your children will make them good citizens.
- You are not worried about your family’s financial security in case you lose a job/client.
Why Is Financial Success Important?
“Less” is sometimes more and even “more” can be less. It sounds complicated but let me break it down for you. Financial success is all about valuing your finances. Financial success includes balance, knowledge, and perspective of having a stress-free financial life. But before these big questions, you should know why you should aspire to be financially successful.
To help people
There are lots of logical reasons why you should be financially successful. One of those is helping people. When you have nothing to worry about your financial condition, you can easily contribute to your family, friends, neighbors, and relatives. This also carries forward your values to society.
Imagine you are taking care of your family, showing care by providing them with comfort, walking alongside a beach, going to a movie night, etc. No doubt your family will feel so special with these small gestures. To make this happen, you have to be successful financially.
To take care of yourself
You can enjoy your life only if you lead a sound and healthy lifestyle. You can not enjoy your huge money without good health. You can use your money to maintain a healthy lifestyle so that you can travel, work, explore, or do anything else without thinking of illness. So, having financial success can be detrimental to living a healthy life.
To get the best education
If you have kids, you will want to give them the best education. Apart from this, you can also take new courses or learn new skills per your wish. If you have finances in order, you can do all of these without worrying much.
To keep growing financially
Using money to make more money! Wondering how? First of all, Yes, it is possible. When you are financially stable, you can use the money to make more money. You can buy other good business with your money. You can also hire tech-savvy or the best employees to grow your business more.
So, there are lots of reasons for aspiring to be financially successful. To make this happen, we will provide you with some sound tips and advice for financial success.
Tips For Financial Success – Get Started With Your Financial Planning
A good financial tip is something simple but quite doable on your own. Paying all your debts, having a money-saving mindset for the future, or investing in some businesses are pretty much basic tips for financial success.
Here are some actionable tips for financial success that will lead you to financial security.
- 1. Make A List Of Your Debts To Be Paid
- 2. Pay Off Credit Card Debt The Fastest You Can
- 3. Calculate The Daily Interest
- 4. Write Down Your Goals And Keep Tracking Progress
- 5. Automate Retirement Contribution
- 6. Monitor Credit Report
- 7. Use Online Banking Accounts And Apps
- 8. Know Your ‘Hourly’ Wage
- 9. Calculate Your Net Worth
- 10. Automate Your Non-Negotiable Expenses
- 11. Create A Separate Account For Savings
- 12. Always Monitor And Categorize Expenses
- 13. Unsubscribe From All Kinds Of Sales Emails
- 14. Explore And Negotiate Higher Pay Options
- 15. Save For Your Holidays To Dream Destinations
- 16. Seek Investment Opportunities
- 17. Sell Unused Or Unwanted Goods
- 18. Make A Budget, Update It From Time To Time
- 19. Go Shopping Alone
1. Make A List Of Your Debts
The very first step you should take is to create a list of everything you owe. Each debt should be there with the current interest. This is the most crucial step forward to financial success in your life.
2. Pay Off Credit Card Debt The Fastest You Can
Do not let the term “minimum payment” on a credit card fool you. If you pay more than the minimum, it does not just reduce the charge of interest but also in the case of student loans, will shorten your repayment term.
Ideally, try and pay off the entire credit card balance due by the payment due date. But, if you have to carry a balance, prioritize paying it all off as fast as you can.
3. Calculate The Daily Interest
It is sure that you will choose a good debt for your education. Right? But always think from the perspective of interest you’re accruing each day. You can check that by using the below-mentioned formula:
(interest rate) ÷ (number of days in the year) x (current outstanding balance) = daily interest
You can find out the real cost of your student loan when you will make this calculation. This can help put things in perspective and urge you to make the right decisions.
Read: Is MBA Worth It?
4. Write Down Your Goals And Keep Tracking Progress
Have you ever heard that just writing down your goals makes it more conceivable to achieve them? Whatever your goal is, it can be a big and long-term goal or just any small goal, just write it down. When you will fix your goal, you can do better with your savings. Slowly but surely you will make progress and reach your goals.
Along with clearing debts, you must keep an eye on your future. If time is on your side, you can start today and take the help of compounding. By this, you will get enough money for your retired life when you will have no regular cash flow. Most of the time, employers sponsor a retirement savings program like a 401(k). Even if you are not that lucky to have a 401(k), you can consider an IRA.
6. Monitor Credit Report
Your credit report can help you keep a healthy credit score. So, you have to make sure that there are no errors. Give a little time to check the credit report errors (if any) so that you can get them resolved in time.
7. Use Online Banking Accounts And Apps
Using just a banking app at home – Is it convenient? Yes, it is! Just download the home banking from your bank and use it whenever you need to track your account details. You do not need to spend time waiting inside a bank to get your statement details or wait for a monthly paper statement. Rather just strive to check your balance from your comfy couch at home. You can also track any fraudulent activities instantly from home. Apart from these, going digital means you may get various offers on your next purchases which is one of the best tips for financial success.
8. Know Your ‘Hourly’ Wage
Getting a job is quite exciting. Isn’t it? But you need to know your hourly rate in your job. Sometimes it can be the reason for your enthusiasm for doing the job and sometimes it can be abysmally disappointing. Keep in mind that your hourly rate is the foundation of your budget planning and other financial goals. Keep your eyes on what you are taking home after paying taxes, against the number of hours you’re putting in.
9. Calculate Your Net Worth
Financial awareness is necessary to maintain a healthy and stress-free financial life. Start with first calculating your net worth. Well, how will you do that? First, take your assets like cash, investments, etc and add them. Now, subtract your liabilities like debt. If you are hunting for your financial achievements, your net worth is the one. This number will show you the overall health of your financial state.
10. Automate Your Non-Negotiable Expenses
Never miss a payment. This will lead you to get a lower credit score. Also, it will incur an unnecessary late fee and a waste of hard-earned money. So, it will be better if you can automate your payments on non-negotiable bills – such as house rent, utilities, credit card payments etc.
Financial advisors generally give out this tip for financial success to automate minimum payments on their credit cards (we say, make it the total amount due).
At least the basic fees like rent, electricity, student loans, etc can be paid automatically. There will be no chance of paying late fees anyhow when you are going to use automated services.
11. Create A Separate Account For Savings
You can create more than one savings account which will help categorize savings better. It will be also a clever hack if you feel you lack the discipline to keep your expense categories separate.
Make sure that you are using at least 20% of your salary for saving purposes. You can also make use of an automated service to deduct your salary and deposit it directly into your savings account. A high-yield savings account can also earn some interest on your savings.
Getting a grasp on your own money is an intelligent step. To save your money properly, you need to track your money. You can take the help of various websites where you can sign up for money tracking technology. When you are tracking your money, you can understand if you have any extra expenses. Just cut down your extra expenses from your next month and this money will be saved directly to your bank account. Maintaining your cash incoming and outgoing also can make you aware of your financial strategy. This is one of the best tips for financial success that will help you.
13. Unsubscribe From All Kinds Of Sales Emails
You need to stop getting tempted by various items which are of no use in your daily life. But if you keep them in your mailbox, you will be tempted to get that item in the market, you will go to purchase them sooner or later. Well, we must stop this! Just unsubscribe your email from those sales emails. Through this, you will be less likely to spend a lot on items you may not need. Instead of sales mail, you can subscribe for various lifestyle tips and tricks, tips for financial success, time management, etc which will add value to your life.
14. Explore And Negotiate Higher Pay Options
If you think your work experience and proficiency deserve more than your current salary, always try to find it in other places. First, figure out what is the main barrier to the deserved salary range. When you are done sorting the point, don’t be shy to ask for your deserved raise. If your current manager is not cool with the raise request, don’t hesitate to shop around for a new employer.
15. Save For Your Holidays To Dream Destinations
Who does not love to go on a holiday to a dream destination? To make your holiday plan solid, start saving for the next vacation right after the current one. When on vacation, you will have no worries to get huge sums of money for enjoying the holiday. So what you can do is save per month. You can start with a small amount at first and then you can increase the savings. So, finally, when the holiday season comes, you can go hassle-free and stress-free.
Did you think about it ever? You may think that it is not possible at all to invest with small cash. But believe me that you can make use of your spare cash. There are lots of strategies that can help you in investing and save money. Apart from this, investing has a higher potential to get back higher returns too. It is one of the best ways to put your money to work and in return, it can build wealth that you can not even imagine.
17. Sell Unused Or Unwanted Goods
Almost every household is full of unwanted materials- it is time to purge those. There are lots of things right in your home which are no longer needed. What you can do is just take a picture and post it on various reselling apps. You can do it on your smartphone. You can get some monetary value back and people who will buy those from you will put them to better use. You can also sell your old clothes in various online stores to recycle those by using or creating various arts and crafts. You can also create these items at your own home and sell them.
18. Make A Budget, Update It From Time To Time
If you are doing a traditional budget, you can upgrade yourself with a proper budget plan for the months or years ahead. Maintain a realistic view of your financial plan so that you can get an overall idea of your upcoming expenses as well as savings. Sometimes, expenses may increase with the new year, so save properly to get rid of payment-time stress.
19. Go Shopping Alone
Solo shopping is a one-of-a-kind experience. Now you may ask “Why?”. Well, suppose, you are with your friends at the time shopping and they say that an outfit you don’t need will look good on you. Now what you are going to do is buy that dress though it is not needed or budgeted for. You can simply avoid this soft peer pressure by going shopping alone. Also, you can make a list of items that you have to buy, and stick to it on your shopping trip.
Changing the whole financial strategy at once can be daunting but with the proper practice of all these tips for financial success, you can achieve a lot. Moreover, you can live a stress-free financial life which will keep you happy like never before.
Frequently Asked Questions (FAQs)
What are some good habits for a financially successful person?
Usually, financially successful people follow some basic tips for financial success. Some of those are:
- Following a budget.
- Healthy financial education.
- Focus on long-term goals.
- Make saving and investing a priority.
- Spend wisely.
What does it mean to be financially smart?
Financial smartness is quite a good trait for any human being. It means you have good control over managing your money. You can save and invest money wisely so that you can live life without stressing about money issues.
What is a financial goal?
A financial goal is an ambition to achieve an objective or target to save money and/or make use of your money. Setting a short-term, mid-term, or long-term financial goal is essential to increase the odds of financial success.
Our Financial Calculator Apps