The financial market is constantly developing, and new tools are appearing in it. But the basic principles on which the successful life model is built are quite simple.
Rule one. Plan your budget.
It is very important that income and expenses are balanced. Even people with good salaries sometimes live in such a way that they barely have enough, that is, they spend more than they earn. This is often unrelated to income level. It may seem like nonsense, but in fact, this behavior prevents you from setting and achieving big financial goals.
A personal budget is the ability to plan your future. And planning is one of the most important elements of life. It is impossible to jump from point A to point B. When you know how to plan for several years ahead, set goals, this allows you to get closer to what you want step by step. Planning includes, among other things, self-development: training, professional development. No major politician, entrepreneur, or scientist stops developing.
Budgeting is not so difficult, a lot of programs that can be found on the Internet will help. Start small today, don’t put it off until tomorrow.
Rule Two. Create a Financial Safety Cushion.
Be sure to keep a reserve that will last at least three to six months of your usual life. The world is unpredictable, no one can predict all the difficulties and challenges. Anyone can get sick, change jobs, or move. At this point, it is important to have a margin of safety in order to calmly go through a difficult time, find a new job or start life in a new place.
It is not always easy to accumulate an airbag in a moment. It can take a long time to form. It is usually recommended to save at least 10% of your monthly income. Gradually, you will be able to accumulate a decent amount of money. You can keep it on a deposit to receive interest.
Rule Three. Don’t Be Tempted by Promises of Quick and Easy Earnings.
When there is already a safety cushion, you can move on to the next stage of financial planning — investments. They allow you to earn and direct funds for long-term development. But it is very important to know a few rules of successful investing.
Don’t Risk Your Last Money
Invest as much as you don’t mind losing. Even if you lose the entire amount, you will learn to feel the risks, invest correctly and build a long-term strategy. Even playing at the Avalon 78 casino can be called an investment, because we have the opportunity to multiply our money. However, it is more likely to be called an investment in your own mood. So distribute your money correctly and don’t risk what you can’t afford to lose.
Don’t Get Emotional
Emotional spending can lead to purchases of not very profitable financial instruments. As they say, measure seven times — cut once.
This rule also applies to investing. I recommend reading the book “Think slowly… decide Quickly” by Daniel Kahneman.
Check the License
Be sure that the company you trust with money is officially operating.
Get Knowledge
The financial market is developing very fast. To be in the trend, you need to constantly learn new things.
Trust the Professionals
You can invest independently through a brokerage account, or you can entrust it to a management company. Remember that profitability and risk are interrelated. A 100% return is fake. It is better for a novice investor to trust a management company or an investment adviser who will select the best fund. Before you commit to something for the first time, ask a professional a question. This will help to protect you from unnecessary mistakes.
Assess the Risks & Diversify Your Funds
Don’t put all the eggs in one basket. If you invest in shares of only one company, you will depend heavily on their exchange rate.
Better distribute the portfolio. These can be stocks and bonds of different companies. By the way, not everything that they offer to invest in is under the control of the Central Bank. Super profitable instruments are not such. For example, cryptocurrencies are associated with high risk, and their price dynamics change very quickly. We recommend investing only in transparent exchange-traded instruments.