Financial stability can be defined as confidence, understanding, and a solid financial foundation, as well as a condition in which the financial system is stable.
and is a way of describing the financial system when it fulfills its basic rules.
Don't be confused; it does not imply wealth, but rather financial stability; how can this happen? It's simply a matter of time and having a better financial understanding or confidence.
Some can take financial risks, while others cannot because of fair or some financial issues or problems that they have encountered, but for doing some practice to build your wealth or to fulfill your promise to yourself for future reference, you can.
There is some simple logic to put in practice so that you can have financial stability.
1. You make an investment in yourself.
Having good health and always maintaining a healthy lifestyle can give you better opportunities to make money, and also having financial knowledge is part of it.
2. Make money doing what you enjoy.
Making money doing what you enjoy is a good place to start, so stick with it. For now, bear with it longer as you intend to be a happier person and also learn more about it for more funds.
3. Create a budget for savings and expenses.
The basic cost of living, such as housing, utilities, food, and transportation, should be under control and not over 50% of your monthly income.
Saving and emergency funds should be around 10%-20% of your monthly income, and other expenses should be less than 30% of your income.
To be financially free, you should not be spending more. Even if you are earning more, this surplus should go for saving or investment.
Don't spend more on unnecessary things.
4. Create an emergency fund.
To do this for yourself, it's a must because uncertainty , illnesses, and accidental incidents can occur at any time.
This amount should be around 6-12 months so that when an emergency event takes place, you can get something to fall back on.
5. Pay off your debts
All your debt should be paid off and after that you should also be financially disciplined. You need to limit your spending every month.
6.Plan for retirement
Don't ever think that it is too far to plan for such. No, it's not too far because the earlier you can do for yourself, the faster you will be financially free.
I think you can get a personal income tax return for yourself as part of your retirement fund as well.
Thanks for your time to read.
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