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we make a lot of financial decisions every day. It is crucial to ensure that you make the right choices as they can have a significant impact on your future. Some people fail to weigh the long-term consequences of their financial strategies, and this can cost them big style down the track.
In a poll conducted by Clara France in 2016, most respondents admitted that their worst financial mistakes included not saving more, and living extravagantly, among other things. I hear this from my financial coaching clients regularly! If you want to build a great future, critically think through the following decisions.
Living within your means
Spending less than you earn is a good principle to observe when you’re aiming for financial freedom. COVID-19 looks like it has come to stay; staying on top of your monthly expenses is a valuable skill to practice and stick with. You’ll be much happier if you live within or below your budget, and avoid the need to borrow to fund your lifestyle.
Living within your income is a big challenge though, especially if you are already in a situation with significant debts to pay back. I support people to put together a debt repayment plan through my financial coaching and also within The Money Lounge membership.
Buying a home
Owning a house is a source of pride for many people and is one of the significant financial decisions that can dictate the happiness of you and your family. After all, having a comfortable place to live is a good thing and at the core of our basic needs.
Buying a house can be a smart financial decision in numerous ways. Your house can generate you some income if you ever decide to rent it out to the public. A home is also a valuable asset, with the potential to increase in value significantly over time.
If homeownership is on your bucket list, ensure that you have a clear strategy about the financing options on your table. One common guideline is to ensure that your mortgage payment doesn’t exceed 28% of your monthly salary. You may also want to seek help from a mortgage broker as they can advise you on how to acquire your dream house without breaking the bank.
Paying your debts
Debt reduction needs to be a priority. Being in debt is one of the leading causes of financial stress and can affect all other aspects of your financial priorities.
One of the smartest financial decisions you can make right now is to start settling your debts bit by bit. Have you tried the debt snowball approach to paying off debt?
When you eliminate your debts in due time, it’ll be easier for you to overcome unexpected adversities.