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1. Earn
Always look for ways to make extra money on the side. A vital key to success is to wisely trade your time for money and keep moving toward more scalable and passive income sources. Earning more money increases your cash flow, which gives you more money to save, invest, or pay down debt. Also, your finances needs to be well established for investing to generate any meaningful income.
2. Spend
This key principle here is to practice the habit of “Spending less than you earn”. To better manage your expenses is to know where you’re spending money. Building good smart spending habits helps you to spend the least amount of money for products and services you use often. You need to learn to spend money wisely, cut out any unnecessary expenses, and minimize your taxes. Budgeting helps you keep track of your income and expenses. It helps group your expenses into different categories to make it easier to identify expenses that can be either eliminated or reduced.
3. Save and Invest
It is a good practice to save up 3-6 months of living expenses so that you have money to fall back on for emergencies, and during times of crisis. Keep this money in a safe and accessible place like a high-yield savings account. Then move on to setting up financial plan and incorporate it with short-term and long-term goals. Figure out When do you need the money? How much money do you need? How much money do you need to save to accumulate the desired amount? And the best investments to help you reach your short and long term goals? Make sure to learn the basics of investing before getting started.
4. Borrow
It is actually possible to live without borrowing any money, but borrowing money is not necessarily a bad thing. The challenge is that most people borrow more than necessary and for the wrong reasons. Hence, you need to understand the difference between good debts and bad debts, and put together a strategy to pay down your bad debts and eventually pay off your good debts.
5. Protect
Insurance are products designed to help you protect against loss and liability. The four basic insurances you need are for life, health, auto, and home. However, do not use an insurance product as a substitute for saving and investing.
Good luck!!!
